1. Suppose the demand and supply curves for a large
specialty pizza are given by:
Qd = 400 - 20P
Qs = -50 + 10P.
a) Using the demand and supply functions above, the
equilibrium price of a pizza is _____, and the equilibrium
quantity is _____. Illustrate your answer.
b) Compute CS and PS and illustrate on a graph.
c) Suppose that the government decrees that a specialty pizza
cannot be sold above $12. As a result of the decree, CS will
increase/decrease by _____; PS will increase/decrease by
_____. Show computations. DWL will equal _____. Show
all computation below.