(Solution) - Let s count the value of lost gains from trade in -(2025 Original AI-Free Solution)

Paper Details

Let?s count the value of lost gains from trade in a regulated market. The government decides it wants to make basic bicycles more affordable, so it passes a law requiring that all one-speed bicycles sell for $30, well below the market price. Use the following data to calculate the lost gains from trade, just as in Figure 8.3. Supply and demand are straight lines.

a. What is the total value of wasted time in the price-controlled market?
b. What is the value of the sum of lost consumer surplus and lost producer surplus?
c. Note that we haven?t given you the original market price of simple bicycles?why don?t you need to know it?