Show that decreasing output below the competitive level decreases total surplus because the cost of producing this output is less than the value consumers place on it. Suppose the quantity produced is Q. 1.) Using the point drawing tool, indicate the competitive equilibrium price and quantity. Label this point 'e.' 2.) Using the triangle drawing tool, indicate the decrease in total surplus relative to the competitive equilibrium from producing Q units of output. Label this triangle 'DWL.' Carefully follow the instructions above, and only draw the required objects. p. $ per unit Q, Units per year

Show that decreasing output below the competitive level decreases total surplus because the cost of producing this output is less than the value consumers place on it. Suppose the quantity produced is Q. 1.) Using the point drawing tool, indicate the competitive equilibrium price and quantity. Label this point 'e.' 2.) Using the triangle drawing tool, indicate the decrease in total surplus relative to the competitive equilibrium from producing Q units of output. Label this triangle 'DWL.' Carefully follow the instructions above, and only draw the required objects. p. $ per unit Q, Units per year

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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