Please use the following graph to answer all the questions. Please show/explain your work for all the parts. If you do NOT show/explain your work, you may
lose points.
Price
18.
17
16.
15
Demand
13
12
11
to NIISupply
4
9.
8
7
-2-1012345 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
M1 PC 3 graph, described in the link M1 PC 3 document
A price ceiling of $3 is placed on the market above.
Quantity
1. Did this price control cause a shortage or surplus? If there is a shortage/surplus, how many units is it?
2. What is the new consumer surplus equal to?
3. What is the new producer surplus equal to?
4. What is the new deadweight loss equal to?
5. What is the new total surplus equal to?
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