**Understanding Consumer and Producer Surplus Using Graphs**In economics, the concepts of consumer and producer surplus are pivotal in understanding how markets allocate resources efficiently. This tutorial will break down these concepts using a graphical representation.### The Supply and Demand GraphThe graph displayed shows the supply and demand curves for a particular market. Here are the key elements of the graph:1. **Axes**: The x-axis represents quantity per period, while the y-axis represents dollars per unit.2. **Curves**: - **D (Demand Curve)**: Downward sloping, indicating that as price decreases, the quantity demanded increases. - **S (Supply Curve)**: Upward sloping, indicating that as price increases, the quantity supplied increases.3. **Equilibrium (e)**: The point where the supply and demand curves intersect signifies the market equilibrium, where quantity supplied equals quantity demanded.4. **Surplus Areas**: - **Consumer Surplus** (blue area above the market price and below the demand curve) - **Producer Surplus** (yellow area below the market price and above the supply curve)### Market Information Provided by the Graph:- **Market Equilibrium** is at a quantity of 1,200 units and a price of $10 per unit.- **Consumer Surplus** is the area above the market price ($10) and below the demand curve up to the equilibrium quantity.- **Producer Surplus** is the area below the market price and above the supply curve up to the equilibrium quantity.### Question & Calculations:The question asks: “If the price in the market is $10, what is the consumer surplus in the market?”The consumer surplus is represented by the area of the triangle above the equilibrium price level ($10) and below the demand curve.#### Step-by-Step Calculation:- The height of the consumer surplus triangle = ($20 - $10) = $10- The base of the consumer surplus triangle = 1,200 unitsArea of a triangle = 0.5 * base * height\[ \text{Consumer Surplus} = 0.5 * 1,200 * 10 \]\[ \text{Consumer Surplus} = 0.5 * 12,000 \]\[ \text{Consumer Surplus} = $6,000 \]### Answer:The correct answer to the question is: $10,000Understanding these

Equilibrium is achieved at the output level where Qs equals Qd. Thus Q*= 2000 units and P*= $ 10

Dollars F $15- e $10- $6 D $2 2,000 1,000 1,200 Quantity per period Use the graph above. If the price in the market is $10, what is the consumer surplus in the market? None of the answers is correct O $40,000 O2,000 units O $10,000 Consumer surplus Producer surplus (D

Dollars F $15- e $10- $6 D $2 2,000 1,000 1,200 Quantity per period Use the graph above. If the price in the market is $10, what is the consumer surplus in the market? None of the answers is correct O $40,000 O2,000 units O $10,000 Consumer surplus Producer surplus (D

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The figure on the right shows that for the 8,000th ticket, the marginal benefit is and the consumer surplus is Price (dollars per ticket) 140 O A. $70; $40 120 O B. $150,000; $40 C. $60; $20 O D. $60; $150,000 O E. $40; $60 100 Market price 80 60 40 20 :D 0 2 4 6 8 10 12 14 16
Which one of the following statement is incorrect? O A. The difference between the lowest price at which producers are willing to supply a product and the price they actually receive is known as the producer surplus O B. The producer surplus is depicted by the area below the demand curve and above the market price. O C. The value between what consumers pay and the maximum value that they are willing to pay for a product is known as the consumer surplus O D. To determine consumer surplus, one must have knowledge of the market price of a particular product
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At a used appliance store, Kathy purchases a used stove for $155 when she was willing to pay $185. If the stove costs $375 new, Kathy's consumer surplus is OA. $195 OB. $375 OC. $220 OD. $180, OE $30
O The demand curve for a product is given by Qp = 400-20P and the supply curve for a product is given by Qs = 16P-32. O a. Illustrate the demand curve and the supply curve on the same graph. O b. Find the equilibrium price and quantity. O c. Find numerical values for the consumer surplus and the producer surplus. O d. Identify consumer surplus and producer surplus on your graph.
8. Consumer and Producer Surplus Suppose Charles is the only seller in the market for bottled water and Yakov is the only buyer. The following lists show the value Yakov places on a bottle of water and the cost Charles incurs to produce each bottle of water: Yakov's Value Value of first bottle: $7 Value of second bottle: $5 Value of third bottle: $3 Value of fourth bottle: $1 Charles's Costs Cost of first bottle: $1 Cost of second bottle: $3 Cost of third bottle: $5 Cost of fourth bottle: $7 The following table shows their respective supply and demand schedules: Price Quantity Demanded Quantity Supplied $1 or less 4 о $1 to $3 3 1 $3 to $5 2 2 $5 to $7 1 3 More than $7 0 4 Use Charles's supply schedule and Yakov's demand schedule to find the quantity supplied and quantity demanded at prices of $2, $4, and $6. Enter these values in the following table. Price Quantity Demanded Quantity Supplied 2 4 A price of brings supply and demand into equilibrium. At the equilibrium price, consumer…
Price of cheese $/16 $20 $10 $20 O 15 S Quantity of cheese (lbs) Refer to the diagram above. The total producer surplus in the market for cheese is $_____ Please input only the numerical value without the $ sign. If your answer is $20, please input 20 for your answer.
Gas-powered hedge trimmers Price (P) S D Quantity (Q) The cost of labor rises in this industry. At the same time consumer tastes shift away from this product in favor of quieter or less-polluting alternatives. What is likely to happen in this market? Select one: O a. Price may rise or fall; Quantity will fall. O b. Price may rise or fall; Quantity will rise. O c. Price will rise; Quantity may rise or fall. O d. Price will fall; Quantity may rise or fall. Clear my choice Check
Quantity Demanded Per Year Quantity Supplied ITT Price Per Unit Per Year 2,000 1,800 1,600 1,400 1,200 1,000 $5 10 300 15 600 20 900 25 1,200 1,500 30 Refer to the above table. In this competitive market, the price and quantity will settle at: O a) $15 and 1,600 units O b) $10 and 2,000 units c) $25 and 1,200 units d) $20 and 900 units
Figure: Producer Surplus Price of book $45 35 5 5 Reference Ref 6-6 Donna OC. $60 OD. $40 Charles Quantity of books (Figure: Producer Surplus) in the accompanying figure, total producer surplus is O A. $80 OB.$85 when the price is $40.