Refer to Question 4c. The total surplus for theater movies is $_____. Do not forget to round to two decimal places, input the decimal point and two places to the right of the decimal point, and place a comma, if needed
Refer to Question 4c. The total surplus for theater movies is $_____. Do not forget to round to two decimal places, input the decimal point and two places to the right of the decimal point, and place a comma, if needed
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Refer to Question 4c. The total surplus for theater movies is $_____. Do not forget to round to two decimal places, input the decimal point and two places to the right of the decimal point, and place a comma, if needed.
Transcribed Image Text:**Educational Exercise on Market Dynamics**
**Graph Description:**
The graph illustrates a typical supply and demand model with the price (P) on the vertical axis and quantity (Q) on the horizontal axis. The supply curve (S) is upward sloping, while the demand curve (D) is downward sloping. The graph is marked with price levels at 10, 25, 50, 75, and 90 and quantity levels at 200, 500, and 800. The equilibrium point, where supply meets demand, appears to be at a price of 50 and a quantity of 500.
**Questions:**
1. **Calculate Consumer Surplus (CS), Producer Surplus (PS), and Total Surplus (TS) assuming this market is efficient.**
*(Use your Economics Rubric)*
2. **Consider the price adjustment scenarios:**
- If the price of the product climbs to $75:
2a. If $75 is a price ceiling, then it would be nonbinding within the market.
2b. If $75 is a price floor, then it would be binding within the market.
3. **Assume the price of the product drops to $25:**
- 3a. If $25 is a price floor, then it would be binding within the market.
4. **Market Dynamics for Theater Movies:**
- The supply curve price-intercept is $5 and the demand curve price-intercept is $30.
- At equilibrium, the market sells 6,000 tickets at $15 per ticket.
- **Suggested Activity:** Draw this scenario on your own paper to visualize the market dynamics.
**Calculations for Theater Movies:**
4a. **Calculate the consumer surplus for theater movies.**
4b. **Calculate the producer surplus for theater movies.**
4c. **Calculate the total surplus for theater movies.**
**Note:** This exercise aims to deepen understanding of how different market mechanisms such as price floors and ceilings affect consumer and producer surplus in different scenarios.
Expert Solution
Step 1
4c. total surplus for theatre movies = Producer surplus + consumer surplus = 30000 + 45000 = 75000
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