Question 3 According to the following Figure, please answer a-f P 16 12 45 8 5 2 · * * . * 8 D Q 20 40 60 According to this graph, how much is the consumer surplus when price is set at equilibrium (P = $8)? (use the area of triangle: Base x Height x ½/2) According to this graph, how much is the producer surplus when price is equal to its equilibrium level (P=$8)? (use the area of triangle: Base x Height x ½) In the graph, how much is deadweight loss at a price of P =$8 (equilibrium)? Now, according to this graph, how much is the consumer surplus when price is set below the equilibrium level at P-$5? (Use the area of a triangle and the area of a rectangle, length x length) According to this graph, how much is the producer surplus when price is equal at P= $5? (use the area of triangle: Base x Heig X In the graph, how much is deadweight loss at a price of $5? (use the area of a triangle) In all cases please show your calculations so I know how to arrive at those numbers!

Question 3 According to the following Figure, please answer a-f P 16 12 45 8 5 2 · * * . * 8 D Q 20 40 60 According to this graph, how much is the consumer surplus when price is set at equilibrium (P = $8)? (use the area of triangle: Base x Height x ½/2) According to this graph, how much is the producer surplus when price is equal to its equilibrium level (P=$8)? (use the area of triangle: Base x Height x ½) In the graph, how much is deadweight loss at a price of P =$8 (equilibrium)? Now, according to this graph, how much is the consumer surplus when price is set below the equilibrium level at P-$5? (Use the area of a triangle and the area of a rectangle, length x length) According to this graph, how much is the producer surplus when price is equal at P= $5? (use the area of triangle: Base x Heig X In the graph, how much is deadweight loss at a price of $5? (use the area of a triangle) In all cases please show your calculations so I know how to arrive at those numbers!

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose the daily demand curve for gasoline is as provided in the accompanying graph. a. Calculate the consumer surplus in the market for gasoline if the market price is $3.50. Consumer surplus = $ ___________ million Now suppose the price decreases to $2.50 per gallon. Move the price line on the graph to reflect this change, then calculate the new consumer surplus. New consumer surplus = $________million
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