Quiz 2: 
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)