Discussion:
Suppose in the market for ECON 1000 private tutoring, the supply curve is P=20+2Q and the demand curve is P=60-2Q where P is the price of private tutoring per hour and Q is the number of hours of private tutoring.
a) Show how to solve for equilibrium number of hours Q^eand price per hour P^e of private tutoring, total revenue to the tutors TR^e, consumer surplus CS^e, producer surplus PS^e, and total surplus TS^e
b) Suppose the government believes the tutors cannot earn a decent living at the equilibrium price P^e from part (a) and it legislates to change the price of private tutoring by $10 an hour with a binding price floor . Show how to solve for the binding price floor . At , solve the quantity supplied and demanded, the quantity of excess supply (surplus) or demand (shortage), total revenue to tutors , consumer surplus , producer surplus , total surplus, and the deadweight loss (if any).