Calculate the consumers surplus, producer surplus. and total surplus when no price restrictions are in place -4-9Briel MackProblem Set 31. What are consumer surplus, producer surplus, and total surplus measuring? to a current market.Total Surplus measures the gain from trade dueProducer surplus means Price minus cost, Consumer Surplus is willingness2. Assume the equilibrium quantity in a competitive market is 6 and the equilibrium price is 16. to pay minusAlso assume the highest willingness to pay is 40 and the lowest cost is 4. Calculate the consumer Price.surplus, producer surplus, and total surplus for this market. (CS)40-16 =2424 + 12 = 40-16 +16 -4 = 40-4 = (ps) 16 = 4 = 123. Describe what is meant by a market outcome being "efficient". The total Surplus is 36.outcome means by being, efficientwhen all information is complete and no cost.what a marketis4. Consider the market for corn described in the graphical model below:ThereP97is a Shilift in elasticity of Demand.1S3-deightweight loss14a) Calculate the consumer surplus, producer surplus, and total surplus when no pricerestrictions are in place.P floorQb) Calculate the consumer surplus, producer surplus, and total surplus with the price floor inplace. The price floor is of the supply is 1c) Explain if the market more efficient or less efficient with the price floor?I think it shows that the market is less efficient with the price floor,d) What is a deadweight loss? Is there a deadweight loss in the corn market without theprice floor? If yes, calculate it. No therewouldn't ble wloss without the Price floorany deadweighte) Is there a deadweight loss in the corn market with the price floor? If yes, calculate it.There isa deightweight loss in the corn marketthe price floor.with

Consumer surplus is defined as the consumer gain that arises when the maximum price that the…

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Calculate the consumers surplus, producer surplus. and total surplus when no price restrictions are in place

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

Calculate the consumers surplus, producer surplus. and total surplus when no price restrictions are in place

-4
-9
Briel Mack
Problem Set 3
1. What are consumer surplus, producer surplus, and total surplus measuring? to a current market.
Total Surplus measures the gain from trade due
Producer surplus means Price minus cost, Consumer Surplus is willingness
2. Assume the equilibrium quantity in a competitive market is 6 and the equilibrium price is 16. to pay minus
Also assume the highest willingness to pay is 40 and the lowest cost is 4. Calculate the consumer Price.
surplus, producer surplus, and total surplus for this market. (CS)40-16 =24
24 + 12 = 40-16 +16 -4 = 40-4 = (ps) 16 = 4 = 12
3. Describe what is meant by a market outcome being "efficient". The total Surplus is 36.
outcome means by being, efficient
when all information is complete and no cost.
what a market
is
4. Consider the market for corn described in the graphical model below:
There
P
9
7
is a Shilift in elasticity of Demand.
1
S
3
-deightweight loss
14
a) Calculate the consumer surplus, producer surplus, and total surplus when no price
restrictions are in place.
P floor
Q
b) Calculate the consumer surplus, producer surplus, and total surplus with the price floor in
place. The price floor is of the supply is 1
c) Explain if the market more efficient or less efficient with the price floor?
I think it shows that the market is less efficient with the price floor,
d) What is a deadweight loss? Is there a deadweight loss in the corn market without the
price floor? If yes, calculate it. No there
wouldn't ble w
loss without the Price floor
any deadweight
e) Is there a deadweight loss in the corn market with the price floor? If yes, calculate it.
There is
a deightweight loss in the corn market
the price floor.
with

Definition Definition Producer’s gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price and up to the equilibrium quantity.

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