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    BUS 525 Project

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    sojol islam
    The document discusses the market for beef shawarma in Dhaka city. It provides the demand and supply schedules and asks questions about equilibrium price and quantity, total economic surplus, the impact of a price ceiling, and changes to consumer and producer surplus. The equilibrium price is $2.5 and quantity is 250 units. The total economic surplus is $781.25. A price ceiling of $1.50 would cause a deficit of 150 units. Students benefit from a higher consumer surplus but overall economic surplus decreases due to deadweight loss.

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    BUS 525 Project

    Uploaded by

    sojol islam
    58 views7 pages
    The document discusses the market for beef shawarma in Dhaka city. It provides the demand and supply schedules and asks questions about equilibrium price and quantity, total economic surplus, the impact of a price ceiling, and changes to consumer and producer surplus. The equilibrium price is $2.5 and quantity is 250 units. The total economic surplus is $781.25. A price ceiling of $1.50 would cause a deficit of 150 units. Students benefit from a higher consumer surplus but overall economic surplus decreases due to deadweight loss.

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    This is the economics course for MBA program and I upload the report

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    The document discusses the market for beef shawarma in Dhaka city. It provides the demand and supply schedules and asks questions about equilibrium price and quantity, total economic surplus, the impact of a price ceiling, and changes to consumer and producer surplus. The equilibrium price is $2.5 and quantity is 250 units. The total economic surplus is $781.25. A price ceiling of $1.50 would cause a deficit of 150 units. Students benefit from a higher consumer surplus but overall economic surplus decreases due to deadweight loss.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    58 views7 pages

    BUS 525 Project

    Uploaded by

    sojol islam
    The document discusses the market for beef shawarma in Dhaka city. It provides the demand and supply schedules and asks questions about equilibrium price and quantity, total economic surplus, the impact of a price ceiling, and changes to consumer and producer surplus. The equilibrium price is $2.5 and quantity is 250 units. The total economic surplus is $781.25. A price ceiling of $1.50 would cause a deficit of 150 units. Students benefit from a higher consumer surplus but overall economic surplus decreases due to deadweight loss.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 7

    Group Project

    Course Title: Managerial Economics


    Course Code: BUS 525
    Section: 01

    Prepared For:
    Dr. Tamgid Ahmed Chowdhury
    Director & Associate Professor
    MBA & EMBA Programs
    Prepared By:
    Name ID
    Jafrul Islam Sojol 1935277060
    Amina Matin 1935156060
    Annoor Ayesha Siddika 1935349660
    Abu Kausar 1935085060
    Md. Nadim Mahmud 1715408660
    Topic: Consider the market for Beef Shwarma in Dhaka city, blessed with thousands of students and
    dozens of small Shwarma stands. The demand and supply schedules are shown in the table.

    Price in Quantity demanded in Quantity supplied in


    dollar thousand units per thousand units per month
    month

    0 500 125

    1.00 400 175

    1.50 350 200

    2.00 300 225

    2.50 250 250

    3.00 200 275

    3.50 150 300

    4.00 100 325

    5.00 0 375

    a. Graph the demand and supply curves. What is the free-market equilibrium in this market?
    b. What is the total economic surplus in this market in the free-market equilibrium? What area in your
    diagram represents this economic surplus?

    c. Suppose the local government, out of concern for the students’ welfare, enforces a price ceiling on
    Beef Shwarma at a price of $1.50. Show in your diagram the effect on price and quantity exchanged.

    d. Are students better off as a result of this policy? Explain.


    e. What happens to overall economic surplus in this market as a result of the price ceiling? Show this in
    the diagram.
    a)

    MARKET FOR BEEF SHWARMA


    6

    4
    Price ($)

    3
    Demand
    Equilibrium
    Supply
    2

    0
    0 100 200 300 400 500 600
    Quantity of Beef

    The equilibrium is at the intersection of demand and supply curves. As shown in the graph, the
    free-market equilibrium are as follows;
    Equilibrium price = $2.5
    Equilibrium quantity = 250
    b)

    MARKET FOR BEEF SHWARMA


    6

    4
    Price ($)

    3
    Demand
    Equilibrium
    Supply
    2
    Total Surplus

    0
    0 100 200 300 400 500 600
    Quantity of Beef

    Total economic surplus is represented by the area shaded blue.

    Total economic surplus = consumer surplus + producer surplus


    Consumer surplus = 0.5*(5 - 2.5)*250
    = $312.5
    Producer surplus = area of Trapezium
    Producer surplus = 0.5*(250 + 125)*2.5
    = $468.75
    Total economic surplus = 312.5 + 468.75
    Total economic surplus = $781.25
    c)

    MARKET FOR BEEF SHWARMA


    6

    4
    Price ($)

    3
    Demand
    Equilibrium
    Supply
    2
    Price Ceiling
    1
    Deficit
    0
    0 100 200 300 400 500 600
    Quantity of Beef

    The price ceiling will cause a deficit.


    The deficit = 350 – 200
    = 150 units.
    The price ceiling will cause a deficit of 150 units as shown in the graph above.
    d)

    MARKET FOR BEEF SHWARMA


    6

    4
    Price ($)

    3
    Demand
    Equilibrium
    Consumer Surplus
    Supply
    2 after Price Celling
    Price ceiling
    1
    Deficit
    0
    0 100 200 300 400 500 600
    Quantity of Beef

    Consumer surplus after price ceiling area shaded green.


    Consumer surplus after price ceiling = 0.5*((5-2.5) + (3-1.5))*200
    = 0.5*(2.5+1.5)*200
    = $400
    Students are better off as a result of this policy; the consumer surplus increases from $312.5
    to $400
    e)
    Answer: The overall economic surplus will decrease.
    The decrease in producer surplus will exceed the increase in consumer surplus. The decrease in
    economic surplus will be equivalent to the deadweight loss.
    In the graph below; the area shaded red is the new economic surplus. The deadweight loss is
    represented by the area labelled DWL.

    MARKET FOR BEEF SHWARMA


    6

    4
    Price ($)

    3
    Demand
    Equilibrium
    DWL Supply
    2
    Price ceiling
    1
    Deficit
    0
    0 100 200 300 400 500 600
    Quantity of Beef

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