part 3 4 5 Assume that the market for gasoline can be represented by the following demand andsupply functions:QD--0.5P+9,andQs-2P-1,where P is the price per gallon, and QD and Qs each represents quantity of gasoline(in millions of gallons) of gasoline consumed and supplied every year. Assume that themarket clears in the sense that QD-Qs.(1) Calculate price and quantity of gasoline under equilibrium.(2) In order to avoid too high prices, the government sets a price ceiling of $3.80 pergallon. What is the new quantity of gasoline supplied to the market? Use a graph of thesupply and demand lines to illustrate your answer, showing the original equilibriumprice and quantity from part (1) and the new quantity supplied at the price ceiling(note that the vertical axis needs to be price and the horizontal axis needs to bequantity).(3) Given the equilibrium price and demand (denoted by Po and Qo), the consumersurplus (CS) is defined asCS(Q.) - P(Q)dQ - P.Qo.where P(Q) is determined by the demand function. Calculate the consumer surplusin equilibrium.(4) Given the equilibrium price and demand, the producer surplus (PS) is defined asPS(Qa) = PaQa - P(Q)dQ,where P(Q) is determined by the supply function. Calculate the producer surplus inequilibrium.(5) The sum of consumer surplus and producer surplus under the price ceiling will bedifferent from the sum of consumer surplus and producer surplus in equilibrium.Will the former sum increase or decrease in comparison to the latter sum? Give yourreason(s).

Answered: Image /qna-images/answer/ad1fa1c4-c196-46f6-93c6-1f016f6698ea.jpg

(3) Given the equilibrium price and demand (denoted by Po and Qo), the consumer surplus (CS) is defined as CS(Q.) = 26) - P(Q)dQ - PaQo. where P(Q) is determined by the demand function. Calculate the consumer surplus in equilibrium. (4) Given the equilibrium price and demand, the producer surplus (PS) is defined as PS(Q.) - P.Q. - P(Q)dQ. where P(Q) is determined by the supply function. Calculate the producer surplus in equilibrium. (5) The sum of consumer surplus and producer surplus under the price ceiling will be different from the sum of consumer surplus and producer surplus in equilibrium. Will the former sum increase or decrease in comparison to the latter sum? Give your reason(s).

(3) Given the equilibrium price and demand (denoted by Po and Qo), the consumer surplus (CS) is defined as CS(Q.) = 26) - P(Q)dQ - PaQo. where P(Q) is determined by the demand function. Calculate the consumer surplus in equilibrium. (4) Given the equilibrium price and demand, the producer surplus (PS) is defined as PS(Q.) - P.Q. - P(Q)dQ. where P(Q) is determined by the supply function. Calculate the producer surplus in equilibrium. (5) The sum of consumer surplus and producer surplus under the price ceiling will be different from the sum of consumer surplus and producer surplus in equilibrium. Will the former sum increase or decrease in comparison to the latter sum? Give your reason(s).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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