The reasons for the budget surplus on the US federal accounts during the 1990s and the reasons for which the surpluses disappeared. Concept Introduction Budget surplus -An excess of the public revenue over public expenditure is defined as a budget surplus. These are the extra funds generated from the efficient management of the public funds and are either saved or spent for repayment of public debt, infrastructural or other developmental activities, military expenses etc. Public debt - It refers to the debt owed by the government towards the public, government agencies, other governments or multilateral organizations. It can be in the form of loans or against the bills, securities or bonds issued to borrow funds.

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19. (20 points in total) Suppose that the market demand curve is p = 80 - 8Qd, where p is the price per unit and Qd is the number of units demanded per week, and the market supply curve is p = 5+7Qs, where Q5 is the quantity supplied per week. a. b. C. d. e. Calculate the equilibrium price and quantity for a competitive market in which there is no market failure. Draw a diagram that includes the demand and supply curves, the values of the vertical- axis intercepts, and the competitive equilibrium quantity and price. Label the curves, axes and areas. Calculate both the marginal willingness to pay and the total willingness to pay for the equilibrium quantity. Calculate both the marginal cost of the equilibrium quantity and variable cost of producing the equilibrium quantity. Calculate the total surplus. How is the value of total surplus related to your calculations in parts c and d?

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Chapter 11, Problem 4.12P

To determine

The reasons for the budget surplus on the US federal accounts during the 1990s and the reasons for which the surpluses disappeared.

Concept Introduction Budget surplus-An excess of the public revenue over public expenditure is defined as a budget surplus. These are the extra funds generated from the efficient management of the public funds and are either saved or spent for repayment of public debt, infrastructural or other developmental activities, military expenses etc.

Public debt- It refers to the debt owed by the government towards the public, government agencies, other governments or multilateral organizations. It can be in the form of loans or against the bills, securities or bonds issued to borrow funds.

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19. (20 points in total) Suppose that the market demand curve is p = 80 - 8Qd, where p is the price per unit and Qd is the number of units demanded per week, and the market supply curve is p = 5+7Qs, where Q5 is the quantity supplied per week. a. b. C. d. e. Calculate the equilibrium price and quantity for a competitive market in which there is no market failure. Draw a diagram that includes the demand and supply curves, the values of the vertical- axis intercepts, and the competitive equilibrium quantity and price. Label the curves, axes and areas. Calculate both the marginal willingness to pay and the total willingness to pay for the equilibrium quantity. Calculate both the marginal cost of the equilibrium quantity and variable cost of producing the equilibrium quantity. Calculate the total surplus. How is the value of total surplus related to your calculations in parts c and d?

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