Consumer surplus and producer surplus .

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Answer 1

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 4, Problem 1QP

To determine

Consumer surplus and producer surplus.

Expert Solution & Answer

Explanation of Solution

The consumer surplus can be explained by the difference between the highest price that the consumer is willing to pay and the actual price that the consumer pays. The difference between these two prices is known as the surplus to the consumer. Thus, when the willing price is higher than the actual price, there will be consumer surplus, and there will be no consumer surplus when the willing price is lower than the actual price.

The producer surplus on the other hand is the difference between the lowest willing to accept price by the producer and the actual price that the producer receives by selling his product. Thus, when the price is higher, there will be a producer surplus, and if the price is lower than the willing to accept price, then there will no producer surplus.

Economics Concept Introduction

Consumer surplus: It is the difference between the highest willing price of the consumer and the actual price that the consumer pays.

Producer surplus: It is the difference between the lowest willing to accept price by the producer and the actual price received by the producer.

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. What the heck is this GDP thingy? It is Thursday afternoon, just a few days before the holiday season starts in your region, and you decided to visit your uncle Chao who owns a local delivery company. While sitting in the living room watching the evening news with your uncle, you heard the news reporter stating the following with an optimistic tone: "According to recent studies, gross domestic product (GDP) is rising due to an increase in consumer spending. The increase in spending was due to an increase in consumer confidence because the job market has shown a positive increase in both employment and income." Immediately, your uncle Chao looked at you with some confusion on his face and asked: What the heck is GDP, and why does the news dude seem excited about its increase? Does this “good” change in this GDP thingy have any effect on my delivery business? How? Do I need to do something different to prepare for the rise in GDP? How?

Answer 2

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 4, Problem 1QP

To determine

Consumer surplus and producer surplus.

Expert Solution & Answer

Explanation of Solution

The consumer surplus can be explained by the difference between the highest price that the consumer is willing to pay and the actual price that the consumer pays. The difference between these two prices is known as the surplus to the consumer. Thus, when the willing price is higher than the actual price, there will be consumer surplus, and there will be no consumer surplus when the willing price is lower than the actual price.

The producer surplus on the other hand is the difference between the lowest willing to accept price by the producer and the actual price that the producer receives by selling his product. Thus, when the price is higher, there will be a producer surplus, and if the price is lower than the willing to accept price, then there will no producer surplus.

Economics Concept Introduction

Consumer surplus: It is the difference between the highest willing price of the consumer and the actual price that the consumer pays.

Producer surplus: It is the difference between the lowest willing to accept price by the producer and the actual price received by the producer.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 4, Problem 1QP

To determine

Consumer surplus and producer surplus.

Expert Solution & Answer

Explanation of Solution

The consumer surplus can be explained by the difference between the highest price that the consumer is willing to pay and the actual price that the consumer pays. The difference between these two prices is known as the surplus to the consumer. Thus, when the willing price is higher than the actual price, there will be consumer surplus, and there will be no consumer surplus when the willing price is lower than the actual price.

The producer surplus on the other hand is the difference between the lowest willing to accept price by the producer and the actual price that the producer receives by selling his product. Thus, when the price is higher, there will be a producer surplus, and if the price is lower than the willing to accept price, then there will no producer surplus.

Economics Concept Introduction

Consumer surplus: It is the difference between the highest willing price of the consumer and the actual price that the consumer pays.

Producer surplus: It is the difference between the lowest willing to accept price by the producer and the actual price received by the producer.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 4, Problem 1QP

To determine

Consumer surplus and producer surplus.

Expert Solution & Answer

Explanation of Solution

The consumer surplus can be explained by the difference between the highest price that the consumer is willing to pay and the actual price that the consumer pays. The difference between these two prices is known as the surplus to the consumer. Thus, when the willing price is higher than the actual price, there will be consumer surplus, and there will be no consumer surplus when the willing price is lower than the actual price.

The producer surplus on the other hand is the difference between the lowest willing to accept price by the producer and the actual price that the producer receives by selling his product. Thus, when the price is higher, there will be a producer surplus, and if the price is lower than the willing to accept price, then there will no producer surplus.

Economics Concept Introduction

Consumer surplus: It is the difference between the highest willing price of the consumer and the actual price that the consumer pays.

Producer surplus: It is the difference between the lowest willing to accept price by the producer and the actual price received by the producer.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 4, Problem 1QP

To determine

Consumer surplus and producer surplus.

Expert Solution & Answer

Explanation of Solution

The consumer surplus can be explained by the difference between the highest price that the consumer is willing to pay and the actual price that the consumer pays. The difference between these two prices is known as the surplus to the consumer. Thus, when the willing price is higher than the actual price, there will be consumer surplus, and there will be no consumer surplus when the willing price is lower than the actual price.

The producer surplus on the other hand is the difference between the lowest willing to accept price by the producer and the actual price that the producer receives by selling his product. Thus, when the price is higher, there will be a producer surplus, and if the price is lower than the willing to accept price, then there will no producer surplus.

Economics Concept Introduction

Consumer surplus: It is the difference between the highest willing price of the consumer and the actual price that the consumer pays.

Producer surplus: It is the difference between the lowest willing to accept price by the producer and the actual price received by the producer.

Answer 6

Chapter 4, Problem 1QP

To determine

Consumer surplus and producer surplus.

Expert Solution & Answer

Explanation of Solution

The consumer surplus can be explained by the difference between the highest price that the consumer is willing to pay and the actual price that the consumer pays. The difference between these two prices is known as the surplus to the consumer. Thus, when the willing price is higher than the actual price, there will be consumer surplus, and there will be no consumer surplus when the willing price is lower than the actual price.

The producer surplus on the other hand is the difference between the lowest willing to accept price by the producer and the actual price that the producer receives by selling his product. Thus, when the price is higher, there will be a producer surplus, and if the price is lower than the willing to accept price, then there will no producer surplus.

Economics Concept Introduction

Consumer surplus: It is the difference between the highest willing price of the consumer and the actual price that the consumer pays.

Producer surplus: It is the difference between the lowest willing to accept price by the producer and the actual price received by the producer.

Answer 7

Chapter 4, Problem 1QP

To determine

Consumer surplus and producer surplus.

Answer 8

Expert Solution & Answer

Explanation of Solution

The consumer surplus can be explained by the difference between the highest price that the consumer is willing to pay and the actual price that the consumer pays. The difference between these two prices is known as the surplus to the consumer. Thus, when the willing price is higher than the actual price, there will be consumer surplus, and there will be no consumer surplus when the willing price is lower than the actual price.

The producer surplus on the other hand is the difference between the lowest willing to accept price by the producer and the actual price that the producer receives by selling his product. Thus, when the price is higher, there will be a producer surplus, and if the price is lower than the willing to accept price, then there will no producer surplus.