Question

the supply and demand for broccoli are described by the following equations;supply QS=6p-80 Demand QD= 120-4p
a. grapgh the suppply curve and the demand curve .what is the equalibrium price and quantity?
b.calculate consumer surplus,producer surplus and total surplus at the equalibrium.
c.if a dictator who hated brocooli were to ban the vegetables,who would bear the larger burden_the buyers or sellers of brocooli?

Answer 1

a.

$$Q_D=Q_S$$

$$120-4p=6p-80$$

$$10p=200$$

$$p=20$$

$$Q=40$$

b.

consumer surplus is $\frac {1}{2}(30-20)\times 40=200$

producer surplus is $\frac{1}{2}(20-\frac{80}{6})\times40=133$

 total surplus  is 200+133=333

c. If the dictator had banned broccoli, sellers would have incurred large losses, since their losses would have included the cost of broccoli cultivation and lost profits.