The graph below shows the market for widgets. The government is considering intervening in this market. $40 Demand $30 Supply $20 $10 0- 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 Quantity a. Calculate the total producer surplus at the market equilibrium price and quantity. Show your work. b. If the government imposes a price floor at $16, is there a shortage, a surplus, or neither? Explain. c. If instead the government imposes a price ceiling at $12, is there a shortage, a surplus, or neither? Explain

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Chapter1: Making Economics Decisions
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I need help answering questions a, b, c, d, ei and eii. (please show all work) 

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The graph below shows the market for widgets. The government is considering intervening in thiS market.
$40
Demand
$30
Supply
$20
$10
0246 8 10 12 14 16 18 20 22 24 26 28 30 32
no
Quantity
a. Calculate the total producer surplus at the market equilibrium price and quantity. Show your work.
b. If the government imposes a price floor at $16, is there a shortage, a surplus, or neither? Explain.
c. If instead the government imposes a price ceiling at $12, is there a shortage, a surplus, or neither? Explain.
d. If instead the government restricts the market output to 10 units, calculate the deadweight loss. Show
your
work.
e. Assume the price decreases from $20 to $12.
i. Calculate the price elasticity of demand. Show your work.
ii. In this price range, is demand perfectly elastic, relatively elastic, unit elastic, relatively inelastic, or
perfectly inelastic?
Price
Transcribed Image Text:The graph below shows the market for widgets. The government is considering intervening in thiS market. $40 Demand $30 Supply $20 $10 0246 8 10 12 14 16 18 20 22 24 26 28 30 32 no Quantity a. Calculate the total producer surplus at the market equilibrium price and quantity. Show your work. b. If the government imposes a price floor at $16, is there a shortage, a surplus, or neither? Explain. c. If instead the government imposes a price ceiling at $12, is there a shortage, a surplus, or neither? Explain. d. If instead the government restricts the market output to 10 units, calculate the deadweight loss. Show your work. e. Assume the price decreases from $20 to $12. i. Calculate the price elasticity of demand. Show your work. ii. In this price range, is demand perfectly elastic, relatively elastic, unit elastic, relatively inelastic, or perfectly inelastic? Price
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