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Question 4 Let's assume that there is a price ceiling for rentals set at $1200) The sum of which areas represents the lost social surplus (deadweight loss) from this price ceiling Market for Rentul Houting Z Tood Y ? 1500 3 v 1204 U 0 50 100 150 O WAV OZV+W DZY+XW*V OXIV 1 pts Question 5 The table below shows the amount of savings and borrowing in the financial market, measured in millions of dollars, at various interest rates
Question 4 Let's assume that there is a price ceiling for rentals set at $1200) The sum of which areas represents the lost social surplus (deadweight loss) from this price ceiling Market for Rentul Houting Z Tood Y ? 1500 3 v 1204 U 0 50 100 150 O WAV OZV+W DZY+XW*V OXIV
1 pts Question 5 The table below shows the amount of savings and borrowing in the financial market, measured in millions of dollars, at various interest rates. What is the equilibrium Interest rate in this market? Interest Rate Quantity Supplied Quantity Demanded 10% 1600 1100 13% 700 1000 950 19 900 900 22 1000 350 25% BOO 300 1100 Previous Next
Question 6 In the market for furniture, If the price of furniture es up by 40% and the quantity demanded of furniture decreases by 60%, then the price elasticity of demand for furniture
Question 7 1 pts In the market for cotton. If the equilibrium price is $0.70 per pound, and if the government adopts a poor for cotton at $0.95 per pound, what will happen They supplied we will stay connecting the futon demanded with The one will supplied
Expert Solution
4) At a price ceiling of $1,200, quantity traded reduced from 100 to 50 which result in deadweight loss of area of portion X + V.
| Before price ceiling | After price ceiling | |
| Consumer Surplus | Z + Y + X | Z + Y + W |
| Producer Surplus | W + U + V | U |
| Deadweight loss | - | X + V |
Option D is correct.
5) Equilibrium occurs when quantity demanded is equal to quantity supplied. At this point, equilibrium rate of interest is 19%.
6) Price elasticity of demand: %change in quantity demanded / %change in price
Price elasticity of demand:[(-60%) / (40%)] = -1.5
7) Equilibrium price = $0.7
Price floor is imposed at $0.95 in the market
As price floor is higher than equilibrium price, quantity supplied would rise and quantity demanded fall which result in surplus of goods.
Option C is correct.
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