Chapter 4, Problem 6P

To determine

The accompanying table shows the supply and demand schedules for used copies of the fourth edition of this textbook. The supply schedule is derived from offers at Amazon.com. the demand schedule is hypothetical.

1. The consumer and producer surplus at the equilibrium price.
2. If the willingness to pay for each potential buyer falls by $20 then show the new demand and supply schedule. Also, calculate the consumer and producer surplus in the new situation.

Concept Introduction:

Consumer Surplus:

The difference between the amount that a consumer is willing to pay for a unit of a product and the amount the customer actually pays.

Producer Surplus:

The difference between the price that the supplier offers and the minimum price at which the producer is willing to supply a unit of a product.