Use the linear demand and supply curves shown below to answer the following questions.You must show all calculations step-by-step or no credit will be given.g) The net gain to society created by this market is $__________. ### Supply and Demand Graph AnalysisThis graph illustrates the principles of supply and demand in a market and is a fundamental concept in Economics.#### Description of the Graph- **Axes**: - The vertical axis (labeled "P") represents the price of the good in dollars, ranging from $0 to $60. - The horizontal axis (labeled "Quantity demanded and supplied") measures the quantity of the good, ranging from 0 to 60,000 units.- **Supply (S) Curve**: - The upward sloping curve "S" represents the supply curve. - It indicates that as the price increases, suppliers are willing to provide more of the good to the market.- **Demand (D) Curve**: - The downward sloping curve "D" represents the demand curve. - It shows that as the price decreases, consumers are willing to purchase more of the good.#### Points of Interest- **Equilibrium Point**: - The intersection of the supply and demand curves marks the equilibrium point for the market. - At this point, the quantity demanded equals the quantity supplied. - The equilibrium price is observed at $40, and the equilibrium quantity is 30,000 units. - **Surplus**: - Surplus occurs when the price is set above the equilibrium price. For example, at a price of $50, the quantity supplied (approximately 50,000 units) exceeds the quantity demanded (approximately 10,000 units).- **Shortage**: - Shortage happens when the price is below the equilibrium price. For instance, at a price of $30, the quantity demanded (approximately 40,000 units) exceeds the quantity supplied (approximately 20,000 units).### SummaryThis graph is a visual representation of how supply and demand interact to determine the market price and quantity of goods. Understanding these concepts helps in analyzing market behavior and predicting how changes in market conditions can affect prices and quantities.

Total surplus denotes the net benefits to society. It is computed by taking the sum of the consumer…

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g) The net gain to society created by this market is $__________.

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

Use the linear demand and supply curves shown below to answer the following questions.You must show all calculations step-by-step or no credit will be given.

g) The net gain to society created by this market is $__________.

### Supply and Demand Graph Analysis

This graph illustrates the principles of supply and demand in a market and is a fundamental concept in Economics.

#### Description of the Graph

- **Axes**:
- The vertical axis (labeled "P") represents the price of the good in dollars, ranging from $0 to $60.
- The horizontal axis (labeled "Quantity demanded and supplied") measures the quantity of the good, ranging from 0 to 60,000 units.

- **Supply (S) Curve**:
- The upward sloping curve "S" represents the supply curve.
- It indicates that as the price increases, suppliers are willing to provide more of the good to the market.

- **Demand (D) Curve**:
- The downward sloping curve "D" represents the demand curve.
- It shows that as the price decreases, consumers are willing to purchase more of the good.

#### Points of Interest

- **Equilibrium Point**:
- The intersection of the supply and demand curves marks the equilibrium point for the market.
- At this point, the quantity demanded equals the quantity supplied.
- The equilibrium price is observed at $40, and the equilibrium quantity is 30,000 units.

- **Surplus**:
- Surplus occurs when the price is set above the equilibrium price. For example, at a price of $50, the quantity supplied (approximately 50,000 units) exceeds the quantity demanded (approximately 10,000 units).

- **Shortage**:
- Shortage happens when the price is below the equilibrium price. For instance, at a price of $30, the quantity demanded (approximately 40,000 units) exceeds the quantity supplied (approximately 20,000 units).

### Summary

This graph is a visual representation of how supply and demand interact to determine the market price and quantity of goods. Understanding these concepts helps in analyzing market behavior and predicting how changes in market conditions can affect prices and quantities.

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