Suppose that the following graph shows a free market equilibrium, with Qe as the equilibrium quantity. Supply Demand QUANTITY For an output level below Qe, the value of a unit to a buyer is the cost of a unit to a seller. Suppose a firm that produces for this market is able to dump toxic chemicals into a river next to its factory, which poisons wildlife and harms the health of nearby residents who have no business with the company. This scenario is characterized by ,which is an example of PRICE
Suppose that the following graph shows a free market equilibrium, with Qe as the equilibrium quantity. Supply Demand QUANTITY For an output level below Qe, the value of a unit to a buyer is the cost of a unit to a seller. Suppose a firm that produces for this market is able to dump toxic chemicals into a river next to its factory, which poisons wildlife and harms the health of nearby residents who have no business with the company. This scenario is characterized by ,which is an example of PRICE
Chapter1: Making Economics Decisions
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Transcribed Image Text:Suppose that the following graph shows a free market equilibrium, with QE as the equilibrium quantity.
?)
Supply
Demand
QUANTITY
For an output level below QE, the value of a unit to a buyer is
v the cost of a unit to a seller.
Suppose a firm that produces for this market is able to dump toxic chemicals into a river next to its factory, which poisons wildlife and harms the
health of nearby residents who have no business with the company. This scenario is characterized by
,which is an example
of
Transcribed Image Text:The following diagram shows supply and demand in the market for smartphones.
Use the black point (plus symbol) to indicate the equilibrium price and quantity of smartphones. Then use the green point (triangle symbol) to
fill the area representing consumer surplus, and use the purple point (diamond symbol) to fill the area representing producer surplus.
Demand
300
270
Equilibrium
240
210
180
Consumer Surplus
150
120
Producer Surplus
90
60
30
Supply
30
60
90
120
150
180
210
240
270
300
QUANTITY (Millions of phones)
Total surplus in this market is $
million.
PRICE (Dollars per phone)
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