Use the following data to answer all of the remaining questions. Consider a commodity market where the products provided by all sellers are identical. A group of 12 potential buyers in this market have willingness to pay (WTP) as follows (in random order): $65, $60, $55, $80, $70, $30, $20, $55, $10, $45, $40, and $15. A group of potential suppliers serving this market have wiliness to accept (WTA) as follows (also in random order): $20, $25, $30, $10, $45, $50, $55, $15, $20, $30, $40, and $60. BasicsWhat is the equilibrium price? How many units will be sold? How many sellers will not engage in a transaction? What is the total value created by all the transactions? SellersWhat is the producer’s surplus in this market for an individual seller with a WTA = $25? What is the value captured by all sellers? BuyersWhat is the value captured in this market by an individual buyer with WTP = $80? What is the total consumers surplus (i.e., all buyers) in this market? Value addedWhat is the value added for the supplier with a WTA of $15?

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Use the following data to answer all of the remaining questions. Consider a commodity market where the products provided by all sellers are identical.

A group of 12 potential buyers in this market have willingness to pay (WTP) as follows (in random order): $65, $60, $55, $80, $70, $30, $20, $55, $10, $45, $40, and $15.

A group of potential suppliers serving this market have wiliness to accept (WTA) as follows (also in random order): $20, $25, $30, $10, $45, $50, $55, $15, $20, $30, $40, and $60.

Basics

What is the equilibrium price?

How many units will be sold?

How many sellers will not engage in a transaction?

What is the total value created by all the transactions?

Sellers

What is the producer’s surplus in this market for an individual seller with a WTA = $25?
What is the value captured by all sellers?

Buyers

What is the value captured in this market by an individual buyer with WTP = $80?

What is the total consumers surplus (i.e., all buyers) in this market?

Value added

What is the value added for the supplier with a WTA of $15?

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