Figure: Allocating Goods Under Price Ceilings

question 151

Essay

Figure: Allocating Goods under Price Ceilings
Refer to the figure. Using the information provided in the graph, answer the following questions:
a. If the goods were allocated only to those users who had the highest-value uses, find the total dollar amount of consumer surplus.
b. If the goods are allocated randomly between the high-value uses and the low-value uses, then what is the average value of the good?
c. If goods are allocated randomly, what is the total dollar amount of consumer surplus?

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Definitions:

Taste Buds

Sensory organs located on the tongue's surface that contain the taste receptor cells, which detect different flavors.

Special Sense

refers to the senses that have specialized organs devoted to them, such as vision, hearing, taste, and smell.

General Sense

Pertains to the basic or common understanding of a concept or perception applicable across different contexts.

Taste

is one of the five senses, involving the perception of flavor from substances on the tongue, mediated by taste buds.