1. The city of Austin can buy roads or light rail. If 5 miles of roads cost $1 million and 10 miles of light rail cost $10 million, what is the city’s opportunity cost of 20 miles of light rail? 2. Suppose the demand curve is: P = 200 – 2QD and the supply curve is: P = 100 + 3QS. What is producer surplus in the market at the equilibrium price and quantity? 3. Assume that Qd = 80-2P and Qs = 2P-20 and the market is in equilibrium. If the government imposes a price ceiling at $20 in this market, what is the loss in producer surplus?
1. The city of Austin can buy roads or light rail. If 5 miles of roads cost $1 million and 10 miles of light
rail cost $10 million, what is the city’s opportunity cost of 20 miles of light rail?
2. Suppose the demand curve is: P = 200 – 2QD and the supply curve is: P = 100 + 3QS. What is producer surplus in the market at the equilibrium price and quantity?
3. Assume that Qd = 80-2P and Qs = 2P-20 and the market is in equilibrium. If the government imposes a price ceiling at $20 in this market, what is the loss in producer surplus?
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