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Compute the lost social welfare (deadweight loss) that stems from the $40 price floor.

16/12/2020 Client: saad24vbs Deadline: 2 Day

Consider a market where supply and demand are given by QXS = -16 + PX and QXd = 92 - 2PX. Suppose the government imposes a price floor of $40, and agrees to purchase any and all units consumers do not buy at the floor price of $40 per unit. a. Determine the cost to the government of buying firms’ unsold units. $ b. Compute the lost social welfare (deadweight loss) that stems from the $40 price floor.


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