Consider a perfectly competitive market in which the market demand curve is given by Qd = 20 – 2Pd, and the market supply curve is given by QS = 2PS….

Consider a perfectly competitive market in which the market demand curve is given by Qd= 20 – 2Pd, and the market supply curve is given by QS = 2PS.a) Find the equilibrium price and quantity in the absence of governmentintervention.b) Suppose the government imposes a price ceiling of $3 per unit. How much issupplied?c) Suppose, as an alternative, the government imposes a production quota limitingthe quantity supplied to six units. What is the market price under this type ofintervention? Is the quantity supplied under the price ceiling greater than, lessthan, or the same as the quantity under the production quota?d) Assuming that under price controls rationing is as efficient as possible andunder the quota, the allocation is as efficient as possible, under which programis the DWL larger: the price ceiling or the production quota?e) Assuming that under price controls rationing is as inefficient as possible whileunder the quota, the allocation is as efficient as possible, under which programis the DWL larger: the price ceiling or the production quota?f) Assuming that under price controls rationing is as inefficient as possible whileunder the quota, the allocation is as inefficient as possible, under which programis the DWL larger: the price ceiling or the production quota?

Consider a perfectly competitive market in which the market demand curve is given by Qd = 20– 2Pd, and the market supply curve is given by QS = 2PS.a) Find the equilibrium price and quantity in…

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