Question

The demand and supply functions for basic cable TV in the local market are given as:

Q(D) = 200,000 - 4,000P and Q(S) = 20,000 + 2,000P

a. If the government implements a price ceiling of $15 on the price of basic cable service, calculate the new levels of consumer and producer surplus.
b. Calculate the consumer and producer surplus in this market. If the government implements a price ceiling of $15 on the price of basic cable service

Answer 1

Answer:

a) Hence the new levels of the consumer are $800,000and the producer surplus is $1,500,000.

b) Hence the consumer and producer surplus in this market is $525,000.

Explanation:

Here the answer is given as follows,