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ME final Exam (QUESTION 8 (AIRCOND VS KWs (-.34) COMPLEMENTARY, COKE VS…
ME final Exam
QUESTION 8
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The Higher the +ve corss price elasticy the greater the subsituidity between 2 goods b&m (+1.54) > mc&bg (+0.82)
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CS,PS, DWL, Redistribution
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PRODUCER SURPLUS (PS)
The difference between how much the producer is willing to supply
Vs How much he received in trade (the difference is the benefit)
DEADWEIGHT LOST (DWL)
The lost in total surplus that occurs when the economy produces at an inefficient quality
PRICE CEILING : Limit to high price - leads to shortage E!
PRICE FLOOR: limit to lowest price - leads to surplus
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