Suppose that the market for pizza is given by the following demand and supply functions: Demand: P= 6 – 0.1Q [Q is quantity demanded (number of…

Suppose that the market for pizza is given by the following demand and supply functions: Demand: P= 6 – 0.1Q [Q is quantity demanded (number of slices); P is price] Supply: P = 0.1Q [Q is quantity supplied (number of slices); P is price] a. The equilibrium price is equal to $_________ and the equilibrium quantity is equal to __________ slices. [4 points] b. Draw a demand and supply diagram for the demand and supply functions given above and identify the equilibrium price and quantity you calculated in Part (a). [Note: Be sure to label the axes, identify the intercepts, and label the demand and supply curves appropriately. Graphs DO NOT have to be drawn to scale] [10 points] i. At the market equilibrium price, consumer surplus is equal to $ __________ [2 points] ii. At the market equilibrium price, producer surplus is equal to $ ___________ [2 points] iii. At the market equilibrium price, total surplus is equal to $ _______________ [2 points] c. Now suppose that, in an attempt to limit consumption of pizza, the government passes a law that sets the minimum price of a slice of pizza (price floor) at $4. i. With the price floor in place, the new consumer surplus is equal to $ ____________ [3 points] ii. With the price floor in place, the new producer surplus is equal to $ _______ [2 points] iii. With the price floor in place, the new total surplus is equal to $ ___________ [2 points] iv. The efficiency loss (deadweight loss) resulting from the price floor is equal to $ ____ [3 points]

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