Problem: Consider the market created by distributing the following 20 playing cards to subjects: Heart Ace, 2, 10, and Spades Ace, 2, 3, 10. The red cards (Hearts) are the costs for the sellers, while the black cards (spades) are the values for the buyers, the Aces representing ls.
Suppose, instead of having a monopolist (i.e. suppose again that the red cards have been distributed to subjects along with the black cards), there was a price floor set at the same level as the monopoly price you just calculated. What would be the predicted price and surplus in this case? Compare these to the monopoly case.