(solution) Question 1: Consider the global market for crude oil Suppose ther

(solution) Question 1: Consider the global market for crude oil Suppose ther

Question 1: Consider the global market for crude oil Suppose ther exists a single crude oil producer. This producer has a supply function for crude oil given by:

P=0.25Q.

World demand for crude oil is given by:

P=150-0.5Q.

Suppose a global government imposes a price ceiling on the market requiring the price for oil to be less than $70/barrel.

e) If the crude oil producer acts as a monopolist, what is the change in consumer surplus as a result of the price ceiling?