Explain the derivation of consumer surplus .

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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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1) Use the supply and demand schedules to graph the supply and demand functions. Find and show on the graph the equilibrium price and quantity, label it (A). P Q demanded P Q supplied 0 75 0 0 5 65 5 0 10 55 10 0 15 45 15 10 20 35 20 20 25 25 25 30 30 15 30 40 35 40 5 0 35 40 50 60 2) Find graphically and numerically the consumers and producers' surplus 3) The government introduced a tax of 10$, Label the price buyers pay and suppliers receive. Label the new equilibrium for buyers (B) and Sellers (S). How the surpluses have changed? Give the numerical answer and show on the graph. 4) Calculate using midpoint method the elasticity of demand curve from point (A) to (B) and elasticity of the supply curve from point (A) to (C).

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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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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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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.