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Unit 2 Assignment: Demand for lift tickets at Aspen is given by P = 90 - Q supply is given by Q = 2P
1. Find the equilibrium price and quantity, consumer surplus and producer surplus.
2. To encourage tourism in Aspen, Pitkin County imposes a price ceiling of $10. Suppose there is no black market. Does this cause a shortage or surplus? What size?
3. Does the price ceiling cause producer surplus to increase or decrease?
4.Are all consumers satisfied with this lower price?

Respuesta :

okpalawalter8

The questions solution is given as

  • Q=60
  • S=0
  • TS=$4762.5
  • TS= $3450

This is further explained below.

To encourage tourism in Aspen, Pitkin County imposes a price ceiling of $10. Suppose there is no black market. Does this cause a shortage or surplus? What size??

Generally, the equation for equilibrium is mathematically given as

Qd=Qs

Therefore

P=90-2P

Q*=2*30

Q=60

b)

Price floor=$10

Quantity demanded

DQ= 30-10

DQ=20

Quantity Supplied

QS= 2*10

QS=20

Surplus

S=20-20

S=0

c) Generally, the equation for Consumer surplus is mathematically given as

CS=0.5(120-45)(75)

CS=$2812.5

Producer surplus

PS=(45-37.5)(75)+0.5(75)(37.5)

PS=$1968.75

Deadweight loss

DL=0.5(45-37.5)(80-75)

DL=$18.75

Total surplus

TS= PS+CS-DWL

TS=$4762.5

d) Generally, the equation for Consumer surplus is  mathematically given as

CS=(70-25)*50+0.5(120-70)*50

CS=$3500

PS=0.5(50)(25)

PS=$625

DL=0.5(80-50)(70-25)

DL=$675

TS= $3450

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