Explain the derivation of consumer surplus .

Question

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Answer 1

Question

Chapter 5, Problem 1QR

To determine

Explain the derivation of consumer surplus.

Expert Solution & Answer

Explanation of Solution

Figure 1 indicates the derivation of consumer surplus.

EBK PRINCIPLES OF MICROECONOMICS (SECON, Chapter 5, Problem 1QR

In Figure 1, the vertical axis measures the price level and the horizontal axis measure the quantity consumed. Point B indicates the price level that consumers are willing and able to pay for the good or service and Point A indicates the actual amount that they actually do pay. Here, the actual market price is less than the benefits of consuming the item. Hence, consumer surplus is the difference between the total amount that consumers are willing to pay and the actual amount they paid. It indicates by area under the demand curve and above the market price. In short, the consumer surplus is a measure of the economic welfare that people gain from purchasing and then consuming goods and services.

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Sketch out (on scratch paper) or else imagine a market for pizza with a linear demand curve that starts at zero Q-demanded when P =$10 and then intersects Supply at P = $8 Q = 100. Find the consumer surplus for that scenario. Just the $ amount but no $ sign.

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The consumer surplus for John is $10 and his maximum willingness to pay for the product is $30 What would have been the market price?

Answer 2

Question

Chapter 5, Problem 1QR

To determine

Explain the derivation of consumer surplus.

Expert Solution & Answer

Explanation of Solution

Figure 1 indicates the derivation of consumer surplus.

EBK PRINCIPLES OF MICROECONOMICS (SECON, Chapter 5, Problem 1QR

In Figure 1, the vertical axis measures the price level and the horizontal axis measure the quantity consumed. Point B indicates the price level that consumers are willing and able to pay for the good or service and Point A indicates the actual amount that they actually do pay. Here, the actual market price is less than the benefits of consuming the item. Hence, consumer surplus is the difference between the total amount that consumers are willing to pay and the actual amount they paid. It indicates by area under the demand curve and above the market price. In short, the consumer surplus is a measure of the economic welfare that people gain from purchasing and then consuming goods and services.

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Answer 3

Question

Chapter 5, Problem 1QR

To determine

Explain the derivation of consumer surplus.

Expert Solution & Answer

Explanation of Solution

Figure 1 indicates the derivation of consumer surplus.

EBK PRINCIPLES OF MICROECONOMICS (SECON, Chapter 5, Problem 1QR

In Figure 1, the vertical axis measures the price level and the horizontal axis measure the quantity consumed. Point B indicates the price level that consumers are willing and able to pay for the good or service and Point A indicates the actual amount that they actually do pay. Here, the actual market price is less than the benefits of consuming the item. Hence, consumer surplus is the difference between the total amount that consumers are willing to pay and the actual amount they paid. It indicates by area under the demand curve and above the market price. In short, the consumer surplus is a measure of the economic welfare that people gain from purchasing and then consuming goods and services.

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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

Chapter 5, Problem 1QR

To determine

Explain the derivation of consumer surplus.

Expert Solution & Answer

Explanation of Solution

Figure 1 indicates the derivation of consumer surplus.

EBK PRINCIPLES OF MICROECONOMICS (SECON, Chapter 5, Problem 1QR

In Figure 1, the vertical axis measures the price level and the horizontal axis measure the quantity consumed. Point B indicates the price level that consumers are willing and able to pay for the good or service and Point A indicates the actual amount that they actually do pay. Here, the actual market price is less than the benefits of consuming the item. Hence, consumer surplus is the difference between the total amount that consumers are willing to pay and the actual amount they paid. It indicates by area under the demand curve and above the market price. In short, the consumer surplus is a measure of the economic welfare that people gain from purchasing and then consuming goods and services.

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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 5, Problem 1QR

To determine

Explain the derivation of consumer surplus.

Expert Solution & Answer

Explanation of Solution

Figure 1 indicates the derivation of consumer surplus.

EBK PRINCIPLES OF MICROECONOMICS (SECON, Chapter 5, Problem 1QR

In Figure 1, the vertical axis measures the price level and the horizontal axis measure the quantity consumed. Point B indicates the price level that consumers are willing and able to pay for the good or service and Point A indicates the actual amount that they actually do pay. Here, the actual market price is less than the benefits of consuming the item. Hence, consumer surplus is the difference between the total amount that consumers are willing to pay and the actual amount they paid. It indicates by area under the demand curve and above the market price. In short, the consumer surplus is a measure of the economic welfare that people gain from purchasing and then consuming goods and services.

Answer 6

Chapter 5, Problem 1QR

To determine

Explain the derivation of consumer surplus.

Expert Solution & Answer

Explanation of Solution

Figure 1 indicates the derivation of consumer surplus.

EBK PRINCIPLES OF MICROECONOMICS (SECON, Chapter 5, Problem 1QR

In Figure 1, the vertical axis measures the price level and the horizontal axis measure the quantity consumed. Point B indicates the price level that consumers are willing and able to pay for the good or service and Point A indicates the actual amount that they actually do pay. Here, the actual market price is less than the benefits of consuming the item. Hence, consumer surplus is the difference between the total amount that consumers are willing to pay and the actual amount they paid. It indicates by area under the demand curve and above the market price. In short, the consumer surplus is a measure of the economic welfare that people gain from purchasing and then consuming goods and services.

Answer 7

Chapter 5, Problem 1QR

To determine

Explain the derivation of consumer surplus.

Answer 8

Expert Solution & Answer

Explanation of Solution

Figure 1 indicates the derivation of consumer surplus.

EBK PRINCIPLES OF MICROECONOMICS (SECON, Chapter 5, Problem 1QR

In Figure 1, the vertical axis measures the price level and the horizontal axis measure the quantity consumed. Point B indicates the price level that consumers are willing and able to pay for the good or service and Point A indicates the actual amount that they actually do pay. Here, the actual market price is less than the benefits of consuming the item. Hence, consumer surplus is the difference between the total amount that consumers are willing to pay and the actual amount they paid. It indicates by area under the demand curve and above the market price. In short, the consumer surplus is a measure of the economic welfare that people gain from purchasing and then consuming goods and services.