Q1: Demand is given by P=75-Q and supply is given by P=Q+5. What would be the dead weight loss if a price floor of 55 is in place?
A1: The first thing we need to do is make sure that this floor is
effective. Without the price floor the equilibrium is where75-Q=Q+5 or
70=Q so Qe = 35 and thus Pe = 40.
As Pe< the price floor this policy is effective. At a price of 55, quantity demanded is given by 55=75-Q or Q=20. The cost to the sellers for 20 units is 20+5 = 25 (the height of the suypply curve) Teh dead weight loss is thus .5*(55-25)*(35-20)=$225.
Q2: If f(x,y)=x2y3+2x find dy/dx.
A: dy/dx =- df/dx / df/dy = - (2xy3+2)/(3x2y2)