Macroeconomics: Private and Public Choice
15th Edition
ISBN: 9781285453545
Author: Russell Sobel; Richard Stroup; James Gwartney; David Macpherson
Publisher: South-Western College Pub
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Chapter 3, Problem 6CQ
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Define consumer surplus and producer surplus. What is meant by economic efficiency, and how does it relate to the gains of consumers and producers?
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Chapter 3 Solutions
Macroeconomics: Private and Public Choice
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Similar questions
- Review the graph at right for a competitive market How much is the consumer surplus? Consumer surplus is $x (round your answer to two decimal places). How much is the producer surplus? Producer surplus is $x (round your answer to two decimal places) How much is the total surplus in this market? Total surplus is $x (round your answer to two decimal places). 100- 90- 80- 70-4 60- 50-145 40- 30- 20- 10- Price 0 45 50 60 70 80 Quantity 10 20 30 40 D MC 90 100arrow_forwardGive some examples of products that are likely to have little if any producer surplus and explain why.arrow_forwardDRAW THE ECONOMIC SURPLUS CURVE AND EXPLAINarrow_forward
- What is the value of consumer surplus? What is the value of producer surplus?arrow_forwardwhat is producer surplus and how is it measured? What is the relationship between the cost to sellers and the supply curve? All else being equal, what happens to producer surplus when the price of a good rise?arrow_forwardFor each scenario, decide whether it results in a producer or consumer surplus. Then calculate the resulting surplus. Alice is willing to spend $30$30 on a pair of jeans and has a coupon for $10$10 off. She purchases a pair of jeans that costs $35$35 pre-discount. Alice receives a Alice's surplus: $ Jeff finds steak in the supermarket priced at$16$16 but that he would have been willing to pay $20$20 for. The butcher notices the meat is near the expiration date and gives him an extra 7575% off. Jeff receives a producer surplus. consumer surplus. Jeff's surplus: $ Nicole has a hockey puck from the 2018 Winter Olympic Games and puts it up for sale on eBay. She will only sell the puck if the winning bid is greater than or equal to $500$500. After the bidding closes, the last bid stands at $501$501. Nicole receives a Nicole's surplus: $arrow_forward
- What happens to total surplus when producer surplus decreases and consumer surplus increases?arrow_forwardA “Spider-man" DVD is worth $30 to Marcus. But he buys one on sale for just $15. What is the consumer surplus that results from Marcus's purchase? $10 $25 $15 Incorrect cannot be determined from the information given Incorrect. $40arrow_forwardExplain the Consumer Surplus and Producer Surplus concept. Why this surplus concept is important in the market analysis? How price changes create inequilibrium in the market?arrow_forward
- The graph illustrates the situation facing the publisher of the only newspaper containing local news in an isolated community. If the newspaper market were perfectly competitive, what would be the quantity, price, consumer surplus, and producer surplus? Draw a point at the equilibrium quantity and equilibrium price if this market is perfectly competitive. Draw and label the consumer surplus. Draw and label the producer surplus. 100- 80- 60- 40- 20- 0- Price and cost (cents per newspaper) 0 MC 100 D 200 300 400 Quantity (newspapers per day) >>> Draw only the objects specified in the question. 500 Qarrow_forwardDetermine whether the following statements is true or false, and explain why. The consumers’ surplus and the producers’ surplus equal each other.arrow_forwardDefine the economic efficiency. Explain in detail.arrow_forward
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