Assume the market for fruit from a local fruit stand has the supply and demand curves given below.
P = 0.9 – 0.08 Q P = 0.1 + 0.02 Q
Where P is in dollars and Q is in hundreds of pounds. Use the information given to
(a) Find equilibrium price and quantity in the market.
(b) Calculate consumer surplus at equilibrium.
(c) Calculate producer surplus at equilibrium.
(d) Determine total economic surplus.
(e) Calculate and discuss the loss in total economic surplus if a price ceiling is imposed on the market at a price of $0.20.