Zone Use the ideas of consumer surplus and producer surplus to explain why economists saycompetitive markets are efficient. Why are below- or above-equilibrium levels of outputinefficient, according to these two sets of ideas?When the consumers' utility goes beyond, goes below) the price paid, consumer surplus isgenerated. Likewise, when producers receive a price (greater, smaller ) than marginal cost,producer surplus is created. By producing up to the point where MB = MC, the maximumpotential consumer surplus (CS) and producer surplus (PS) is generated. Producing (more. less )than the equilibrium level means that potential surplus is left unrealized (underproduction).Overproduction subtracts from the surplus because society values the use of the additionalresources in other pursuits more than it values them in consumption of that good.

Consumer Surplus is the difference between the consumer's willingness to pay and what he actually…

Answered: Zone Use the ideas of consumer surplus…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Give some examples of products that are likely to have little if any producer surplus and explain why.
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ed Graphically, producer surplus is measured as the area Multiple Choice under the demand curve and below the actual price. under the demand curve and above the actual price. above the supply curve and above the actual price. above the supply curve and below the actual price.
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