00:01
Okay, so for this question, let's first agree this question a bit.
00:05
So first we know that at originally, the demand curve is d and the supply curve is s1.
00:13
So the market achieved an equivalent with the price of 250 and with the quantity of 45.
00:20
But now because there's some decrease in supply, supply curve shipped from s1 to s2.
00:26
So basically, part a say that if there's no price selling, how will be the equivalent price now? so the new equivalent price is what we need to find the crosspoint of the supply curve and demand curve.
00:43
So basically, the new equivalent price will see p star prime equals 350 and the quantity q star prime equals $350 and the quantity q star prime equals 40.
00:56
40 and because it is at the equivalent quantity demanded equals quantity supplied okay and if now there is a price ceiling the price selling is set to 250 but there's no black market so if that's a case the new price should be let's say price third double prime equals 250 because this price selling is lower than the equivalent price okay and the quantity demanded q star prime prime as a qd equals at 250 qd equals 45 and qs equals 30 so the amount of shortage equals 15 okay the difference between the quality demand and quantity supplied and part b saying that if the price ceiling is important and there's no black market.
02:03
No black market means that the market price for the gas is always 250, is set by the government.
02:11
Okay, so there's no black market to show the area representing consumer surplus, producer surplus, and that weight loss.
02:19
So basically, we know that the quality demand is 45, the quantity supplied is only 30.
02:25
So the total quantity that is available in the market is only 30.
02:28
So if we'll try to find consumer surplus, it should be this area.
02:38
This large area here will be the consumer surplus.
02:42
And producer surplus should be this lower triangle, producer surplus, and the dead weight loss should be this triangle here.
02:53
This is dead weight loss.
02:56
Okay, so this is for the case when there's no black market.
02:59
This is part b.
03:00
Part c say that if there is a black market.
03:05
And we need to reread this question.
03:07
We say that the price of the gas raised to the maximum that consumers are willing to pay for the amount supplied by producer at 250.
03:17
So firstly, we need to know that at 250, what is the total amount that is willing to be supplied by the producer? at 250, the quantity supplied is 30.
03:33
And say that the price of gas raised to the maximum that consumers are willing to pay.
03:40
So that means at the quantity of 30, actually consumers are willing to pay 550.
03:47
So the price selling equals 250 that is set by the garment.
03:53
But now, because there is black market available...