Use the following questions to guide your understanding on consumer and producer surplus. If also you need additional help, you may refer to the following video https://www.youtube.com/watch?v3n0LXkA9kato to help you answer the questions below. Part 1: The Consumer (Imagine that you are the consumer) Based on Figure 1: i) What is the highest price a consumer is willing to pay for a bar of Cadbury chocolates? $4 ii) How much does the consumer end up paying for a bar of Cadbury chocolates? i.e. what is the market price of a bar of chocolate? $ iii) Thus, does a consumer end up paying more or less? Hence, the difference between what a consumer is willing to pay for a chocolate bar relative to its market price is known as In the above figure, this is represented as Area A or Area B? Part 2: The Producer (now imagine you are a producer)

Use the following questions to guide your understanding on consumer and producer surplus. If also you need additional help, you may refer to the following video https://www.youtube.com/watch?v3n0LXkA9kato to help you answer the questions below. Part 1: The Consumer (Imagine that you are the consumer) Based on Figure 1: i) What is the highest price a consumer is willing to pay for a bar of Cadbury chocolates? $4 ii) How much does the consumer end up paying for a bar of Cadbury chocolates? i.e. what is the market price of a bar of chocolate? $ iii) Thus, does a consumer end up paying more or less? Hence, the difference between what a consumer is willing to pay for a chocolate bar relative to its market price is known as In the above figure, this is represented as Area A or Area B? Part 2: The Producer (now imagine you are a producer)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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