a) Use the information in the table to graph supply & demand curves. Show Consumer Surplus and Producer Surplus on your graph. b) Find the equilibrium price and quantity, using both the table and the graph for a more precise answer. Calculate total revenue at the equilibrium. c) Suppose the Mayor decides that deep fried green chiles cost too much. Show the impact of a price ceiling at $6.00 on your graph. What would happen to the quantity produced and consumed? What would happen to total revenue?
a) Use the information in the table to graph supply & demand curves. Show Consumer Surplus and Producer Surplus on your graph. b) Find the equilibrium price and quantity, using both the table and the graph for a more precise answer. Calculate total revenue at the equilibrium. c) Suppose the Mayor decides that deep fried green chiles cost too much. Show the impact of a price ceiling at $6.00 on your graph. What would happen to the quantity produced and consumed? What would happen to total revenue?
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter3: Demand And Supply
Section: Chapter Questions
Problem 53P: Table 3.8 shows information on the demand and supply for bicycles, where the quantities of bicycles...
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Question
![Problem 3: Price Ceilings
Demand for deep
fried green chiles at
the state fair
3500
3000
2500
2000
1500
1000
0
Price
$3.00
$6.00
$9.00
$12.00
$15.00
$18.00
$21.00
Supply of deep fried
green chiles at the
state fair
100
500
900
1300
1700
2100
2500
a) Use the information in the table to graph supply & demand curves. Show Consumer Surplus and
Producer Surplus on your graph.
b) Find the equilibrium price and quantity, using both the table and the graph for a more precise
answer. Calculate total revenue at the equilibrium.
c) Suppose the Mayor decides that deep fried green chiles cost too much. Show the impact of a price
ceiling at $6.00 on your graph. What would happen to the quantity produced and consumed? What
would happen to total revenue?
d) Who benefits from this policy? Who is harmed by this policy? Write out your answer and provide
numbers, or refer to the graph, whenever possible. A good answer will explain the meaning of
deadweight loss. A perfect answer will also refer to the gains, losses and deadweight loss shown on
your graph.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F01148604-49fa-4748-a56e-665f5e33aa44%2F92c6bae5-7df5-4e6f-9e6b-6f676cf7a94b%2F2fpuabb.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 3: Price Ceilings
Demand for deep
fried green chiles at
the state fair
3500
3000
2500
2000
1500
1000
0
Price
$3.00
$6.00
$9.00
$12.00
$15.00
$18.00
$21.00
Supply of deep fried
green chiles at the
state fair
100
500
900
1300
1700
2100
2500
a) Use the information in the table to graph supply & demand curves. Show Consumer Surplus and
Producer Surplus on your graph.
b) Find the equilibrium price and quantity, using both the table and the graph for a more precise
answer. Calculate total revenue at the equilibrium.
c) Suppose the Mayor decides that deep fried green chiles cost too much. Show the impact of a price
ceiling at $6.00 on your graph. What would happen to the quantity produced and consumed? What
would happen to total revenue?
d) Who benefits from this policy? Who is harmed by this policy? Write out your answer and provide
numbers, or refer to the graph, whenever possible. A good answer will explain the meaning of
deadweight loss. A perfect answer will also refer to the gains, losses and deadweight loss shown on
your graph.
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