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Consider the accompanying supply and demand graph. 9. 8- What is the value of consumer surplus? 7- 6- Supply $ (5, 4.5) What is the value of producer surplus? Demand 2- $ 6. 8 Quantity What is the value of total (also called social or economic) surplus? $

Consider the accompanying supply and demand graph. 9. 8- What is the value of consumer surplus? 7- 6- Supply $ (5, 4.5) What is the value of producer surplus? Demand 2- $ 6. 8 Quantity What is the value of total (also called social or economic) surplus? $

ECON MICRO
ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter4: Demand, Supply, And Markets
Section: Chapter Questions
Problem 5.9P
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Consider the accompanying supply and demand graph. 9- 8- What is the value of consumer surplus? 7- 6- Supply $ 5- (5, 4.5) 4 What is the value of producer surplus? 3- Demand 2- 1- $ 6. Quantity What is the value of total (also called social or economic) surplus? $ Price ($)
Transcribed Image Text:Consider the accompanying supply and demand graph. 9- 8- What is the value of consumer surplus? 7- 6- Supply $ 5- (5, 4.5) 4 What is the value of producer surplus? 3- Demand 2- 1- $ 6. Quantity What is the value of total (also called social or economic) surplus? $ Price ($)
The Ministry of Misallocation has decreed that the production of widgets must be 5000 each month and the production of gizmos must be 8000 each month. Calculate the deadweight loss in each market caused by these restrictions. Please note the scale of the quantity axis is in thousands. Price of widgets Price of gizmos S100 s10 9. 90 Supply Supply 8 80 7 70 6 60 5 50 4 40 3 30 Demand Demand 2 20 1 10 0 1 2 3 4 5 6 7 8 9 10 o 2 4 6 8 10 12 14 16 18 20 Quantity of widgets (in thousands) Quantity of gizmos (in thousands) What is the deadweight loss in the widgets market? What is the deadweight loss in the gizmos market? %24
Transcribed Image Text:The Ministry of Misallocation has decreed that the production of widgets must be 5000 each month and the production of gizmos must be 8000 each month. Calculate the deadweight loss in each market caused by these restrictions. Please note the scale of the quantity axis is in thousands. Price of widgets Price of gizmos S100 s10 9. 90 Supply Supply 8 80 7 70 6 60 5 50 4 40 3 30 Demand Demand 2 20 1 10 0 1 2 3 4 5 6 7 8 9 10 o 2 4 6 8 10 12 14 16 18 20 Quantity of widgets (in thousands) Quantity of gizmos (in thousands) What is the deadweight loss in the widgets market? What is the deadweight loss in the gizmos market? %24
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