Scenario: The table below shows the reservation values of ten buyers and a seller for a loaf of bread. Each buyer would buy at most one loaf and the seller can make up to ten loaves. Initially trades happen under the market mechanism with each agent making a decision according to the market price and his or her own reservation value. Then the government imposes a price ceiling of $1.00 per unit.
-Refer to the scenario above.What is the total surplus at the equilibrium before the price ceiling is imposed?
Definitions:
Gains and Losses
Financial terms referring to the positive or negative changes in value of investments or assets relative to their original purchase price.
Liquidation Gain/Loss
The financial result realized when the assets of a company are sold off or liquidated.
Liquidating
The process of converting a company's assets into cash and distributing it to the debt holders and shareholders during the winding up of the company.
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