|Question||Suppose that the supply and demand curves for the designer purse in Problem 1 are given as above. Further suppose that the wife of a local politician owns one of these purses and wants to make sure that its particular style remains relatively exclusive. She convinces her husband to institute a quantity regulation (quota) at 30.
a. Calculate the new consumer and producer surplus values after this intervention.
b. What is the deadweight loss associated with the quota?
c. Suppose the local government institutes a price regulation (floor) at $591 instead of the quota. Calculate the new consumer and producer surplus values after this intervention.
d. What is the deadweight loss associated with the price floor?
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