6. Producer surplus and price changesThe following graph plots a supply curve (orange line) for a group of recent graduates looking to sell used motor scooters. Each seller has only a singleused scooter available for sale. Think of each rectangular area beneath the supply curve as the "cost," or minimum price that each seller is willing toaccept. Assume that anyone who has a cost that equals the market price is willing to sell their used scooter.PRICE (Dollars per used scooter)24020016012080400स■0Hubert☐Statement■1YXKateManuelPoornimaShen234QUANTITY (Used scooters)5ValerieĐ6Region X (the purple shaded area) represents total producer surplus when the market price is equal to $area) representswhen the market priceIn the following table, indicate which statements are true or false based on the information provided on the previous graph.Producer surplus is smaller when the price is $140 than when it is $100.while Region Y (the grey shadedAssuming each seller receives a positive surplus, Hubert will always receive more producer surplus than Kate.TrueIn order for Valerie to earn a producer surplus of exactly $40 from selling a used scooter, the market price must be $FalseOO

This can be defined as a concept that is shown when the willingness of the seller or the individual…

Region X (the purple shaded area) represents total producer surplus when the market price is equal to $ when the market price area) represents Statement In the following table, indicate which statements are true or false based on the information provided on the previous graph. Producer surplus is smaller when the price is $140 than when it is $100. F Assuming each seller receives a positive surplus, Hubert will always receive more producer surplus than Kate. while Region Y (the grey shaded In order for Valerie to earn a producer surplus of exactly $40 from selling a used scooter, the market price must be True O False O O

Region X (the purple shaded area) represents total producer surplus when the market price is equal to $ when the market price area) represents Statement In the following table, indicate which statements are true or false based on the information provided on the previous graph. Producer surplus is smaller when the price is $140 than when it is $100. F Assuming each seller receives a positive surplus, Hubert will always receive more producer surplus than Kate. while Region Y (the grey shaded In order for Valerie to earn a producer surplus of exactly $40 from selling a used scooter, the market price must be True O False O O

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose the government of the island has decided to give consumers a more attractive price for tomatoes by imposing a fixed, per unit subsidy. Thus, start with the original demand (Qd = 450 - 100P) and supply (Qs = 50P) and analyze this new intervention, the subsidy. The subsidy works like this: each tomato seller receives a 3-dollar refund for each kilogram of tomatoes sold. Write down the equation for the new "effective supply" curve. Determine the new equilibrium quantity and equilibrium price. What is the price that the consumers will pay for their tomatoes? What is the price that the producers will effectively earn for their tomatoes, inclusive of the subsidy? How much will the government spend on tomato subsidies in this case in total? (Recall the units of measurement: P is the price in dollars per kilogram of tomatoes; and Q is the quantity of tomatoes, expressed in thousands of kilograms.) Graphically depict the new equilibrium complete with (solved) values for the new…
A1-1. Imagine that a market for a good is characterized by the following supply and demand equations: QS = –35 + 35P QD =100 – 10P where QS and QD are quantities in units and P is the price per unit. (a) Graph the supply and demand curves with quantity on the horizontal and price on the vertical axis. Be sure to calculate the P and Q intercepts for demand and the P intercept for supply. Calculate and illustrate the equilibrium price and quantity. [Hint: Show your work.] (b) Calculate both the demand and supply elasticity around the equilibrium point. [Hint: you can use either the point method or the average arc (midpoint) method.] (c) If a regulator imposes a quantity restriction by granting quotas for 60 units of output to existing producers, what is the new price and quantity traded? Does this policy create deadweight loss (DWL) in the market? Briefly explain and identify any DWL in your diagram. (d) What is the value of a unit of quota? Illustrate in your diagram.…
Consider the market for corn. Suppose that right now, the equilibrium price is considered “too low” by farmers (i.e. suppliers) in order to make a living. These farmers go to their state representatives and convince them to enact a price floor that is above the equilibrium price. Depict this situation graphically. Is there a shortage or a surplus (or does nothing happen)? Now, conceptually, describe how we know with certainty, that consumers are harmed by this policy. Then, describe conceptually how farmers may be harmed or may benefit from this policy. Graphically depict how we know that consumers are harmed while farmers may be better or worse off (ambiguous). If we were to consider the “total surplus” of consumers and farmers, can we say with certainty whether this economy is better or worse off from the price floor?
Consider the data in the table below when you answer this question. (As the table suggests, the demand curve for this continuous good is a straight line and so is the supply curve. Use that information and the geometric method for calculating surplus.) P $12 12 $10 4 10 $8 8 8 $6 12 6 $4 16 4 $2 20 2 Suppose the price is $8 but that only 4 pizzas are bought and sold due to regulations imposed by the government. The most social surplus that can be generated is
Anderson is willing to pay $12. Kendrick can provide the item for $10, but producing the item imposes a cost of $8 on Talib. If Anderson purchases the item from Kendrick for $11, what is the total surplus from the transaction? (Remember, do not enter the $, and enter the - if TS is negative.)
Continue your analysis of the video poker market in Cedar Rapids: demand by patrons for the games (in thousands per week) is Qd = 180 - 4P and the supply is Qs = 2P - 30 where P is the price in cents charged to play a game. Now suppose that the city of Cedar Rapids passes a new law which requires that all video poker arcades contribute m cents to a city charitable fund for each game played on their machines. This is, essentially, an excise tax. In a new diagram, show the effect of the new law on the market and explain this effect. (Do not try to give an algebraic solution; just show what happens graphically and provide a description. Please be sure to illustrate how the tax of m cents shifts a specific curve, consistent with the approach we’ve taken in this course in modeling taxes and subsidies. Clearly indicate the distance by which the curve has shifted. Recall that the direction of the shift carries a specific meaning in economics for depicting taxation/subsidies.) Graphically…
Small engines are the main components of office and house appliances like printers, hand dryers, microwave ovens, food processors, etc. The graph depicts the market for small engines in the United States. Suppose that the government imposes a $15 tariff on each imported engine in an effort to bring manufacturing jobs back to the United States. Place the Waste shape to describe the waste of resources that would result from the trade restriction. Price (3) Incorrect 50 45 40 35 30 25 20 15 10 5 0 0 total cost: What is the total cost of the tariff? 337.5 Domestic supply Domestic demand 15 30 45 60 75 90 105 120 135 150 Quantity (millions of engines) Incorrect World supply Waste millions of dollars
6. Producer surplus and price changes The following graph plots a supply curve (orange line) for a group of recent graduates looking to sell used smart devices. Each seller has only a single used smart device available for sale. Think of each rectangular area beneath the supply curve as the "cost," or minimum price that each seller is willing to accept. Assume that anyone who has a cost that equals the market price is willing to sell their used smart device. PRICE (Dollars per used smart device) 360 300 240 180 120 60 0 0 □ 0 Jacques 1 XO Kyoko 49 Musashi ☐ Rina U Sean 2 3 4 QUANTITY (Used smart devices) D 0 ☐ 5 Yvette Đ 6 (?)
You are a math tutor, and you offer in-home tutoring on weekday afternoons for $20 an hour. On Saturdays, you tutor students hourly for free at the community center. Since you follow the Rational Rule for Consumers, which statement can you conclude is TRUE? Your economic surplus rises or at least remains unchanged when you tutor at the community center. You couldn't gain any economic surplus from tutoring at the community center since you earn $0 per hour. You can't compare the two types of tutoring because you can't quantify how much donating your time means to you. O The time you spend tutoring the students on weekday afternoons lowers your economic surplus.
Suppose demand and supply for services of surgeons in Australia each day are given below, where demand and supply are expressed in terms of number of services per day, and P = price per service Qd=2000−2P Qs=3P What area(s) comprise the consumer surplus after the implementation of the production quota? (select all relevant areas) a) A b) B c) C d) E e) D f) F
Use the rectangles to shade the areas representing producer surplus for each person who is willing to sell a smartphone at a market price of $175. (Note: If a person will not sell a smartphone at the market price, indicate this by leaving his or her rectangle in its original position on the palette.) 400 350 Kevin Brian 300 250 Crystal Hilary 200 Market Price Edison 150 Edison 100 Crystal Hilary 50 Brian 1 2 5 6. 7 Kevin QUANTITY (Smartphones) will sell smartphones at the given market price, and total Based on the information on the preceding graph, you can tell that producer surplus in this market will be $ Suppose the market price of a smartphone increases to $275. PRICE (Dollars per smartphone)