Problem 1. Price ceiling in the market for gas. The demand and supply for gas on a regular day isPrice3.52.00 2.25 2.50 2.75 3.003.25140 100 60Quantity demanded40Quantity supplied60 100 140 160 200a) Draw the demand and supply curves on a diagram. Mark the equilibrium point.Q₂²g220 200 180=40b) A price ceiling is imposed: It is illegal to sell gas above $2.25 per gallon. What is the quantitydemanded and quantity supplied at this price? What is the excess demand? What is the maximum priceconsumers will be willing to pay for the amount of gas available in the market after the ceiling isimposed?220Qs=|Qo-Qs=pconsumersc) Identify the effect of the policy on the consumers and the producers. Compute the Deadweight loss.ACS =APS =DWL =d) You need to buy 20 gal of gas and you're willing to pay up to $4 per gallon. The opportunity cost ofyour time is $10/hour. What is the maximum amount of time you would be willing to wait in line for gasonce the ceiling is imposed?e) Can you think of two conditions under which a price ceiling would hurt, rather than help consumers?

Demand represents the quantity of a good or service that buyers are willing and able to purchase at…

Problem 1. Price ceiling in the market for gas. The demand and supply for gas on a regular day is Price 2.00 2.25 2.50 2.75 3.00 3.25 3.5 Quantity demanded 220 200 180 140 100 60 40 Quantity supplied 40 60 100 140 160 200 220 a) Draw the demand and supply curves on a diagram. Mark the equilibrium point.

Problem 1. Price ceiling in the market for gas. The demand and supply for gas on a regular day is Price 2.00 2.25 2.50 2.75 3.00 3.25 3.5 Quantity demanded 220 200 180 140 100 60 40 Quantity supplied 40 60 100 140 160 200 220 a) Draw the demand and supply curves on a diagram. Mark the equilibrium point.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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