Answered: At the market equilibrium price,…

At the market equilibrium price, consumer surplus would be [Select] (thousand). V If the government mandates a price floor of $80, consumer surplus will fall to [Select] (thousand).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Price of gizmos
$100
90
80
70
60
50
40
30
20
10
0
Supply
Demand
24 68 10 12 14 16 18 20
Quantity of gizmos (in thousands)
At the market equilibrium price, consumer surplus would be
[ Select]
(thousand).
If the government mandates a price floor of $80, consumer surplus will fall to
[ Select]
(thousand).

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Step 1: Define consumer surplus

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Step 2: Find consumer surplus at equilibrium price

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Step 3: Find the consumer surplus at price floor $80

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