Using the image presented on the worksheet, the consumer surplus is $_____. Do not forget to round to two decimal places, input the decimal point and two places to the right of the decimal point, and place a comma, if needed.
Using the image presented on the worksheet, the consumer surplus is $_____. Do not forget to round to two decimal places, input the decimal point and two places to the right of the decimal point, and place a comma, if needed.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Refer to Question #1: Using the image presented on the worksheet, the consumer surplus is $_____. Do not forget to round to two decimal places, input the decimal point and two places to the right of the decimal point, and place a comma, if needed.
![Use this image to answer the following (independent) questions:
![Graph Description]
- The graph is titled with "P" (Price) on the vertical axis and "Q" (Quantity) on the horizontal axis.
- The supply curve, labeled "S," is upward-sloping from left to right.
- The demand curve, labeled "D," is downward-sloping from left to right.
- Horizontal lines are at price levels 90, 75, 50, 25, and 10.
- Vertical lines indicate quantities at 200, 500, and 800.
1. In the space below, calculate CS (Consumer Surplus), PS (Producer Surplus), and TS (Total Surplus), assuming this market is efficient. (Use your Economics Rubric)
2. Using the above image, assume the price of the product climbs to $75.
2a. If the price of $75 on the image above is, instead, a price _______, then it would be nonbinding within the market.
2b. If the price of $75 on the image above is a price _______, then it would be binding within the market.
3. Using the above image, assume the price of the product drops to $25.
3a. If the price of $25 on the image above is a price floor, then it would be _________ within the market.
4. Consider the market for theater movies. The price-intercept for the supply curve is $5. The price-intercept for the demand curve is $30. At equilibrium, this market sells 6,000 tickets at $15 per unit. My suggestion is to draw this on your own paper, so you can see the illustration of the market dynamics and use it to answer these questions:
4a. Calculate the consumer surplus for theater movies.
4b. Calculate the producer surplus for theater movies.
4c. Calculate the total surplus for theater movies.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F60ab4a3c-90a5-4741-b5df-57c75fb94bcc%2F8ef521b2-c5f9-4612-a420-0a8dd583a5e6%2Fdzgfo5r_processed.png&w=3840&q=75)
Transcribed Image Text:Use this image to answer the following (independent) questions:
![Graph Description]
- The graph is titled with "P" (Price) on the vertical axis and "Q" (Quantity) on the horizontal axis.
- The supply curve, labeled "S," is upward-sloping from left to right.
- The demand curve, labeled "D," is downward-sloping from left to right.
- Horizontal lines are at price levels 90, 75, 50, 25, and 10.
- Vertical lines indicate quantities at 200, 500, and 800.
1. In the space below, calculate CS (Consumer Surplus), PS (Producer Surplus), and TS (Total Surplus), assuming this market is efficient. (Use your Economics Rubric)
2. Using the above image, assume the price of the product climbs to $75.
2a. If the price of $75 on the image above is, instead, a price _______, then it would be nonbinding within the market.
2b. If the price of $75 on the image above is a price _______, then it would be binding within the market.
3. Using the above image, assume the price of the product drops to $25.
3a. If the price of $25 on the image above is a price floor, then it would be _________ within the market.
4. Consider the market for theater movies. The price-intercept for the supply curve is $5. The price-intercept for the demand curve is $30. At equilibrium, this market sells 6,000 tickets at $15 per unit. My suggestion is to draw this on your own paper, so you can see the illustration of the market dynamics and use it to answer these questions:
4a. Calculate the consumer surplus for theater movies.
4b. Calculate the producer surplus for theater movies.
4c. Calculate the total surplus for theater movies.
Expert Solution
Step 1
Q1.
When the market is efficient, the equilibrium is arrived where demand is equal to supply. At Price of 50 $, demand is equal to supply and quantity traded is 500 units.
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