using the graph answer the following questions8-9 listed on image10. what is the size of social (total) surplus **Price Floors and Market Surplus**1. **Understanding Price Floors** When a price floor is implemented, it sets a minimum price that must be paid for a good or service. For example, consider a scenario in which a price floor has been established for a certain commodity.2. **Impacts on Market Supply and Demand** **Question 6:** As a result of this price floor, is there a shortage or surplus, or is the price floor non-binding? - If the price floor is set above the equilibrium price, it may lead to a surplus of goods or services. If it is set below or at the equilibrium price, it will be non-binding and have no effect on the market. *Answer:* The price floor in this scenario is non-binding.3. **Quantifying Shortage or Surplus** **Question 7:** What is the amount of the shortage or surplus? - To determine whether a shortage or surplus exists, and its magnitude, we need to compare the quantity supplied and the quantity demanded at the price floor. *Answer:* Since the price floor is non-binding, there is no shortage or surplus.**Supply and Demand Analysis for Pizza Rolls**4. **Graph Analysis** The provided graph illustrates supply and demand curves for pizza rolls. The x-axis represents the quantity of pizza rolls, while the y-axis represents the price of pizza rolls. The intersection of the supply and demand curves indicates the market equilibrium. - The **demand curve** (downward sloping) represents the relationship between the price of pizza rolls and the quantity demanded by consumers. - The **supply curve** (upward sloping) represents the relationship between the price of pizza rolls and the quantity supplied by producers. - The point where these two curves intersect denotes the equilibrium price and quantity.5. **Consumer Surplus Analysis** **Question 8:** What is the size of the consumer surplus? - Consumer surplus is calculated as the area between the demand curve and the price level, up to the quantity bought in the market. *Answer:* The consumer surplus is 2 (3).6. **Producer Surplus Analysis** **Question 9:** What is the size of the producer surplus? - Producer surplus is calculated as the area between the supply curve and the price level, up to the quantity sold in the market.

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Answered: The graph below shows the supply and…

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter4: Demand, Supply, And Market Equilibrium

Section: Chapter Questions

Problem 25P