2. Here's a quick problem to test whether you really understand what producer surplus and consumer surplus mean, rather than just relying on the geometry of demand and supply. For each of the two diagrams that follow, calculate producer surplus, consumer surplus, and total surplus. Assume the curves are perfectly vertical and perfectly horizontal. Demand Supply Quantity

2. Here's a quick problem to test whether you really understand what producer surplus and consumer surplus mean, rather than just relying on the geometry of demand and supply. For each of the two diagrams that follow, calculate producer surplus, consumer surplus, and total surplus. Assume the curves are perfectly vertical and perfectly horizontal. Demand Supply Quantity

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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O Macmillan Learning Suppose that Michelle buys a cappuccino from Paul's Cafe and Bakery for $4.25. Michelle was willing to pay up to $7.25 for the cappuccino, and Paul's Cafe and Bakery was willing to accept $1.75 for the cappuccino. Based on this information, answer the following questions. Michelle's consumer surplus: $ Paul's Cafe and Bakery's producer surplus: $
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Macmilla As with any supply and demand diagram, the of diamond rings is labeled on the vertical axis, and the of diamond rings demanded and supplied is labeled on the horizontal axis. price; quantity quantity: price supply; demand demand; supply consumer surplus; producer surplus
Use the following graph to answer the question: how much is producer surplus? What is the total value to consumers of consuming the first ten units of this good? Use the following graph to answer the question: how much is producer surplus? What is the total value to consumers of consuming the first ten units of this good?
3. Assume the minimum price needed for a producer to sell a good is $7, and the maximum price a buyer is willing to pay for the good is $13. If the good sells for $11, what is producer surplus? What is consumer surplus? 4. On the graph below, determine the areas of consumer surplus and
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Use the following information to answer Questions 1 - 3 In a competitive market for whole milk, the market demand is QD = 1000 – 50P and the market supply is QS = 150P, where Q denotes the quantity in gallons and P denotes the price in dollars. [1] Calculate the competitive market equilibrium price? [2] Calculate the competitive market equilibrium quantity? [3] At the competitive market equilibrium price and quantity, calculate the value for consumer surplus? Hint: it might be helpful to construct a graph.
1. Consider the market for cell phones in Celltown. Suppose that the inverse demand curve is P = -2Qd + 300 and that the inverse supply curve is P = 3Qs + 50. a. Sketch the inverse supply and inverse demand curves. b. Calculate the equilibrium price and quantity. c. Compute consumer surplus (CS), producer surplus (PS), and total surplus. d. Suppose the Mayor of Celltown institutes a price floor of P = $250 in order to promote the new technology. It is illegal to sell cell phones at a price below P. What is the quantity transacted in the market with the price floor? e. Compute the change in CS and the change in PS. f. Compute the change in total surplus. If you were an economic advisor to the Mayor whose goal is to maximize the total surplus of the city, would you advise continuing the policy or not? Explain. g. A representative of the Association of Cell Phone Manufacturers arrives at the Mayor's office to lobby against eliminating the price floor. i. Explain why economic theory…