Essay
The supply and demand for 9-volt batteries are given by QD = 230 - 10P and QS = 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 QD = 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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