5. If a consumer is willing to pay Rs 20 for an apple and is able tobuy it for Rs. 15, then the consumer surplus is:(a) Rs. 35(b) Rs. 15(c) Rs. 5(d) Rs. 20

# Consumer surplus is given to be as the difference between consumers willingness to pay and the…

Answered: 5. If a consumer is willing to pay Rs…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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part A, B, C (see graph pic) A)what is the dollar value of the total surplus producer surplus plus consumer surplus when the efficient output level Q1 when is being produced? how large is the dollar value of the consumer surplus at Q1? B) What is the dollar value of the deadweight loss when level Q2 is being produced?what is the total surplus one output level Q2 is being produced? C) what is the dollar value of the deadweight loss went output level Q3 is produced? what is the dollar value of the total surplus when output level Q3 is produced?
20. An increase or decrease in the price of wheat results in a shift of its demand curve.(a) True(b) False
Question 1. Melissa buys an iPhone for $120 and gets consumer surplus of $80. a) What is her willingness to pay? b) If she had bought the iPhone on sale for $90, what would her consumer surplus have been?
a, b, and c of this have already been solved (see attached). Attachment also includes original question. (d) How much is the total surplus of this economy? (e) Now suppose that the industry makes a one-time investment for $K amount of dollars to innovate in a new technology of production that allows every firm to reduce its cost of production to a 1/4 fraction of the previous cost. What is the new total surplus of the economy? Who is benefiting the most from the industry innovation? (f) Is it reasonable to assume that in the long-run $K is exactly equal to the size of the industry profits? why?
7.Producing goods at minimum possible cost is known as a)productive efficiency b)macroeconomic efficiency c)dynamic effciency d)allocative effciency
1. Provide a real life example of when you experienced consumer surplus and explain why this is a good example of consumer surplus. Hint: Purchasing something on sale or negotiating a lower price does not necessarily mean consumer surplus was experienced. 75 - 100 words.
1. Suppose market demand for gasoline is given by QD = 60-2P where QD is quantity demanded and P is the market price. Market supply is given by Qs = 4P where Qs is quantity supplied and P is the market price. (a) Find the equilibrium price and quantity in this market. (b) What is the consumer surplus and producer surplus? (c) Suppose that the government imposes a $3 tax on the good, to be included in the posted price (i.e. tax paid by suppliers). What is new equilibrium posted price? How much of that price do producers keep? What is the new market equilibrium quantity? What is the change in surplus for consumers? What is the change in surplus for producers?
(II) The consumer has the income m = 50 and prices of the two goods are p 1 = 5 and p2 = 2. (a) Find the budget set of this consumer. What is the opportunity cost of good 2 in terms of good 1? (b) Suppose the price of good 2 increases to p 2' = 10. What is now the budget set. (c) Suppose now that also income increases to m = 250 and that the price of good 1 increases to 25. What is now the budget set? Compare with the budget set you found in (a) and comment!
2. Consider an individual who not only consumes goods x and y, but also needs a mini- mum amount of x = xo to survive. Her (Stone-Geary) utility function is given by U(x, y) = (x − x₁)¹/2y¹/2 Let prices be pa, Py and income is I > Prxo.
4)Which of the following correctly describes consumers' surplus? * a)Maximum buying price - minimum selling price. b)rice received - price paid. c)Maximum buying price - price paid. d)Price received - minimum selling price
48
Consumer surplus is a measure of the difference between: a) The price which a consumer has to pay and the cost of producing the good (in a diagram, the area between the market price, and the supply curve). b) The consumer’s willingness to pay, and the cost of production (the area between the demand curve and the supply curve). c) The value which a consumer places on a unit of the good, and the market price (the area between the demand curve and the market price line). d) The marginal revenue from sales and the marginal cost of sales (the area between the marginal revenue and the marginal cost curves).

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5. If a consumer is willing to pay Rs 20 for an apple and is able to buy it for Rs. 15, then the consumer surplus is: (a) Rs. 35 (b) Rs. 15 (c) Rs. 5 (d) Rs. 20