The Supply and Demand for 9-Volt Batteries Are Given by Q^D

question 140

Essay

The supply and demand for 9-volt batteries are given by Q^D = 230 - 10P and Q^S = 30P - 10, where P is the price per four-pack and Q measures the number of four-packs.
a. What are the levels of consumer and producer surplus at the equilibrium price?
b. Suppose that a hurricane causes widespread blackouts, shifting the demand curve for 9-volt batteries outward, with the new demand curve equal to Q^D = 690 - 10P. If the government sets a price ceiling equal to the pre-hurricane price (the old equilibrium price), what is the level of consumer surplus?
c. If the government did not impose the price ceiling, what would consumer surplus equal? Are consumers better off with the price ceiling?

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Definitions:

Generally Accepted Accounting Principles

A set of accounting standards and practices that are widely used and accepted in the preparation of financial statements in the United States.

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The projected or planned selling expenses over a specific period, often used in financial planning.

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The primary source of revenue in a merchandising company.

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Costs incurred directly in the selling of goods or services, such as commissions and advertising.