Consider the following supply and demand equations: Supply: p= 10+q Demand: p= 100 – 29 Show your work as your respond to the following questions

1)

Market equilibrium is attained where Demand = Supply:

Price = 40

Quantity = 30

2)

Total surplus at equilibrium = Area bounded by Demand and supply curves with the Y axis

Total surplus at equilibrium = (100 - 10) x 30/2 = 1350

3) price ceiling = 50 (maximum price)

This would be non-binding as equilibrium price < price ceiling

Total surplus remains the same = 1350

4)

price ceiling = 20 (maximum price)

This would be binding as equilibrium price > price ceiling

Consumer surplus = green shaded region in the graph above

CS = (100 - 80) x 10/2 = 100

5)

price ceiling = 10 (maximum price)

This would be binding as equilibrium price > price ceiling

Dead weight loss = entire total surplus calculated in part 2) , this is because no supplier would be willing to supply at a price = 10.

Quantity supplied = 0

DWL = 1350

please see the attached file for the complet solution.