16. Answer all parts (a)-(e) of this question. = Consider a competitive market for a good, where the market demand is QD 80 - 2P, where QD is the quantity demanded and P is the price of the good, while the market supply is QS = -15 + 3P, where is the quantity supplied. (a) [5 marks] Find the equilibrium price and quantity in the market. Show your result in a graph. (b) [5 marks] What is the total welfare in the market at the equilibrium? Show your result in a graph. (c) [5 marks] Suppose the government introduce a price cap P = 15. What are the effects of introducing such a price cap on the market equilibrium? Show your result in a graph. (d) [5 marks] How total welfare in the market changes after the introduction of the cap? Show your result in a graph. (e) [5 marks] Since price controls policy tends to create deadweight losses in free markets where those controls are introduced, would you argue against the use of this government policy? Explain.
