What is the numerical change in producer surplus in going, Ask an Expert

Economics

Suppose the following supply and demand curves govern the market for lungs:

QS = 4,000 + P and QD = 10,000 -2P.

(a) Assume that individuals are allowed to sell their lungs. Graph the supply and demand curves and find out the equilibrium price and quantity. Identify graphically and find out total surplus.

(b) What is the numerical change in consumer surplus in going from a situation in which the sale of lungs is permitted to one in which it is prohibited? Is there a gain or loss in consumer surplus?

(c) What is the numerical change in producer surplus in going from a situation in which the sale of lungs is permitted to one in which it is prohibited? Is there a gain or loss in producer surplus?

(d) What is the numerical deadweight loss created by prohibiting the sale of lungs?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M975011

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