Suppose that last year the equilibrium price and the quantity of good Xwere $10 and 5 million pounds. Because of strong demand this year, the equilibrium price and the quantity of good X are $12 and 7 million pounds, respectively. Assuming that the supply curve of good X is linear, what happened to producer surplus in the market? A Producer surplus increased from $12.5 million to $49 million. Producer surplus increased from $12.5 million to $24.5 million. Producer surplus increased from $3 million to $7 million. Producer surplus increased from $4.2 million to $5.6 million. B C D

Suppose that last year the equilibrium price and the quantity of good Xwere $10 and 5 million pounds. Because of strong demand this year, the equilibrium price and the quantity of good X are $12 and 7 million pounds, respectively. Assuming that the supply curve of good X is linear, what happened to producer surplus in the market? A Producer surplus increased from $12.5 million to $49 million. Producer surplus increased from $12.5 million to $24.5 million. Producer surplus increased from $3 million to $7 million. Producer surplus increased from $4.2 million to $5.6 million. B C D

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter19: Elasticity

Section: Chapter Questions

Problem 11QP

See similar textbooks

Similar questions

What is consumer surplus? How is it illustrated on a demand and supply diagram?
Explain why the following statement is false: In the goods market, no buyer would be willing to pay more than me equilibrium price.
A change in which of the following causes a movement along a given demand curve for a normal good? * Consumer income The demand for the good The price of the good O The price of a substitute good O The number of buyers Which of the following will initially result from an increase in the market demand for a good? * Total producer surplus in the market will decrease. There will be a matching increase in supply. There will be a decrease in quantity supplied. The equilibrium price will decrease. O There will be a temporary shortage at the original equilibrium price.
Suppose the market for exercise bikes experiences the following event: The government reduces subsides on exercise equipment. What will be the effect on the equilibrium? O Equilibrium price increases and equilibrium quantity decreases. O Equilibrium price and quantity increase. O Equilibrium price and quantity decrease. O Equilibrium price decreases and equilibrium quantity increases.
7. Producer surplus for an individual and a market Suppose the market for cheesecake is a perfectly competitive market-that is, sellers take the market price as given. Sean owns a restaurant where he sells cheesecake. The following graph shows Sean's weekly supply curve, represented by the orange line. Point A represents a point along his supply curve. The price of cheesecake is $3.00 per slice, as shown by the horizontal black line. Sean's Weekly Supply 7.50 6.75 6.00 5.25 4.50 3.75 3.00 Price 225 1.50 0.75 Supply 4. 10 12 14 16 18 20 QUANTITY (Slices of cheesecake) PRICE (Dollars per slice)
The following table shows the quantity supplied and quantity demanded of a good at certain unit pricesUnit Price Quantity Supplied Quantity Demanded$22.50 34400 56000$24.50 37600 49600$28.00 43200 38400a) Show that the quantity supplied and demanded are linear functions of price and find the supply and demand functions.b) At what prices are the quantity supplied and demanded equal to zero and is there a shortage or surplus of the commodity at a price of $30.00 per unit?
Q3 From the table given below, calculate market equilibrium. For market equilibrium price to be 30, How much should be the demand and supply?
Question 3 Suppose the demand for a product is given by Q-100-5P, where Qp is quantity per year measured in kilogram and P is the price in AUD per kilogram. The supply curve for this product is given by Qs=4P-8. Answer the following questions and provide a graph illustration. a) Determine the equilibrium price? b) Calculate the elasticity of demand and supply at the equilibrium price. c) Determine the consumer surplus and producer surplus at the equilibrium price? d) Suppose that the government imposes a floor price of A$15 and promises to buy any surplus (e.g., Q³- QD) on the market. Determine the new consumer surplus, the new producer surplus, and the government expenditure of this policy e) Instead of using the floor price, now the government imposes a A$3 tax on each kg sold, determine the market price after having this tax policy. f) Calculate the consumer surplus, producer surplus and tax revenue. g) Using the concepts of demand and supply elasticity, predict which party, the…
Chapter 2 Problem #5. Suppose the demand and supplycurves for a product are given by QD= 500 −2PQS=−100 + 3Pa. Graph the supply and demand curves.b. Find the equilibrium price and quantity.Qd= Q3500-2P= -100+3PP= Pe = 120 & Qe=260The equilibrium price is $120 and the quantity is 260c. If the current price of the product is $100, what is thequantity supplied and the quantity demanded? How would you describe thissituation, and what would you expect to happen in this market?d. If the current price of the product is $150, what is thequantity supplied and the quantity demanded? How would you describe thissituation, and what would you expect to happen in this market?e. Suppose that demand changes to QD= 600 â€“ 2P.Find the new equilibrium price and quantity, and show this on your graph.***PLEASE SHOW ALL EQUATIONS AND METHODS,
Macmillan Learning Assume that we are looking at the egg market and presently the equilibrium price for a dozen eggs is $3.50 and the present equilibrium quantities are at 5 million dozen. Suppose the price of chicken feed that is fed to egg producing chickens triples in price. Which of the following best describes the impact that this would have on the egg market? Holding all other variables constant. The supply curve would decrease shifting to the left, causing an excess demand for eggs. The market would then begin to adjust as price would increase, which causes the quantity demanded to increase and quantity supplied to decrease until the quantities demanded and supplied are equal at a new equilibrium. This new equilibrium would be at a price higher than $3.50 and at quantities less than 5 million dozen. The supply curve would decrease shifting to the right, causing an excess demand for eggs. The market would then begin to adjust as price would increase, which causes the quantity…
Consider the market for bicycles which is initially in equilibrium. Suppose that the number of bicycle producers increases at the same time that the cost of labour decreases. Which of the following statements is true about the market for bicycles given this information O a. The equilibrium price will decrease and the equilibrium quantity will increase Ob. The equilibrium price will increase and the equilibrium quantity will decrease Oc. The equilibrium price may increase, decrease or remain the same while the equilibrium quantity will increase Od. The equilibrium quantity may increase, decrease or remain the same while the equilibrium price will decrease
Researchers demonstrate conclusively that drinking 4-6 ounces of beer each day increases life expectancy by 3 years. What happens in the market for beer? The equilibrium price falls, and the equilibrium quantity rises. O The equilibrium price and quantity fall. O The equilibrium price rises, and the equilibrium quantity falls. The equilibrium price and quantity rise.