Question

The supply and demand in the regional vegetable market can be described with the following equations: Qo = 4P - 80 Qd = 100 - 2P The quantity (Q) is expressed in quintals and the P in dollars per quintal. to. What are the equilibrium conditions in the vegetable market? yes. Calculate the consumer surplus, the producer surplus and the total surplus in the vegetable market. C. Which economic sector (consumers or producers) will have the greatest weight if the government prohibits the consumption of vegetables in the population?

Answer 1

Answer:

Individual answer to parts are given :

a. At equilibrium,

Qs=Qd  

4P-80=100-2P  

6P=180

P*=30

Q*= 4*30-80= 40

Equilibrium price=$30

Equilibrium Quantity= 40

b. Consumer surplus=0.5(50-30)(40)= $400

Producer surplus=0.5(30-20)(40)= $200

Total surplus= $400+$200=$600

c. Elasticity of demand at P=30 & Q=40, Ed= -2*(30/40)= -1.5

Elasticity of supply at P=30 & Q=40, Es= 4*(30/40)= 3

Demand is More inelastic than supply. So consumers will have more burden in case of prohibition of vegetables.