Shana decides to buy a pair of used ripped jeans for $80. She was willing to pay $100. When her friend tanya sees the jeans, she loves them and thinks they are worth $165. So she offers shana $135 for the jeans, and shana accepts. Shana and tanya are both thrilled with the exchange. The total surplus received by both shana and tanya is $ ? Part 2 Suppose that shana purchased the jeans from Maries boutique. Marie and other boutique owners in town are upset that customers like shana buy jeans at their stores, and then resell them for a higher price. Marie and the other owners convince the city government to pass a law preventing such resale. Assuming the law is successful, how much surplus is lost if shana cannot sell the jeans to tanya? $. ?

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Market Surplus and Shortage Analysis

In everyday language, a “surplus” indicates that there is an excess of something, while a “shortage” means that there is a scarcity of it. In economics, “market surplus” refers to the condition where the quantity of a certain good more available than what is required or “demanded” by the market. In the same way, a “market shortage” refers to the condition where the quantity of a certain good is less available than what is “demanded” by the market. If quantity in demand is written as Qd and quantity that is supplied is written as Qs, then, the condition Qs > Qd indicates market surplus and condition Qd > Qs indicates market shortage.