The consumer surplus and the producer surplus .

Question

Want to see more full solutions like this?

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 7, Problem 1CQQ

To determine

The consumer surplus and the producer surplus.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'a' is correct.

Explanation of Solution

The equilibrium price is determined by the demand for the cost and the supply of cost, normally. The consumer surplus can be explained as 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. The producer surplus is the difference between the minimum willing to accept price by the seller and the actual price that the seller receives for the commodity.

The maximum willing to pay price by the consumer for the massage here is $300. The actual price that the consumer pays after the negotiation between the two is $200. Since the difference between the maximum willing to pay price and the actually paying price is the consumer surplus, it can be calculated as follows:

Consumer surplus=Maximum willing to pay price−Actually paying price=300−200=100

Thus, the consumer surplus is $100.

Similarly, the minimum willing to accept price by the massager is $60 per hour and she spends 2 hours for the service, which totally costs $120, minimum. But the actual amount received by her is $200; this difference between the actual price received by the seller and the minimum willing to accept price is the producer surplus, which can be calculated as follows:

Producer surplus=Actually received price−Minimum willing to accept price=200−(60×2)=200−120=80

Thus, the producer surplus is $80.

Option (a):

Here, the consumer surplus is $100 from receiving the massage from the producer and the producer surplus is $80 by providing the massage service to the consumer. The difference between the consumer surplus and the producer surplus is $20. This means that the consumer surplus is higher than the producer surplus by $20 and hence, option 'a' is correct.

Option (b):

Here, the consumer surplus is $100 from receiving the massage from the consumer and the producer surplus is $80 by providing the massage service to the consumer. This means that the consumer surplus is higher than the producer surplus by only $20. But the given value in option 'b' is $40, which is twice the actual value. Thus, option 'b' is incorrect.

Option (c):

The consumer surplus is $100 from receiving the massage from the consumer and the producer surplus is $80 by providing the massage service to the consumer. This means that the consumer surplus is higher than the producer surplus by $20. Option 'c' points that the producer surplus is higher than the consumer surplus by the value of $20, which is inverse to the actual situation. Thus, option 'c' is incorrect.

Option (d):

The consumer surplus is $100 from receiving the massage from the producer and the producer surplus is $80 by providing the massage service to the consumer. The difference between the consumer surplus and the producer surplus is $20. The consumer surplus is $20 more than the producer surplus. Since option 'd' argues that the producer surplus is $40 larger than the consumer surplus, option 'd' is incorrect.

Economics Concept Introduction

Concept introduction:

Consumer surplus: It is the difference between the highest willing to pay 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 that is received by the producer.

Equilibrium price: It is the market price determined by equating the supply to the demand. At this equilibrium point, the supply will be equal to the demand and there will be no excess demand or excess supply in the economy. Thus, the economy will be at equilibrium.

Want to see more full solutions like this?

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

Students have asked these similar questions

Suppose the exchange rate between the British pound and the U.S. dollar is £1 = $2.00. The U.S. government implementsU.S. government implements a contractionary fiscal policya contractionary fiscal policy. Illustrate the impact of this change in the market for pounds. 1.) Using the line drawing tool, draw and label a new demand line. 2.) Using the line drawing tool, draw and label a new supply line. Note: Carefully follow the instructions above and only draw the required objects.

Just Part D please, this is for environmental economics

3. Consider a single firm that manufactures chemicals and generates pollution through its emissions E. Researchers have estimated the MDF and MAC curves for the emissions to be the following: MDF = 4E and MAC = 125 – E Policymakers have decided to implement an emissions tax to control pollution. They are aware that a constant per-unit tax of $100 is an efficient policy. Yet they are also aware that this policy is not politically feasible because of the large tax burden it places on the firm. As a result, policymakers propose a two- part tax: a per unit tax of $75 for the first 15 units of emissions an increase in the per unit tax to $100 for all further units of emissions With an emissions tax, what is the general condition that determines how much pollution the regulated party will emit? What is the efficient level of emissions given the above MDF and MAC curves? What are the firm's total tax payments under the constant $100 per-unit tax? What is the firm's total cost of compliance…

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 7, Problem 1CQQ

To determine

The consumer surplus and the producer surplus.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'a' is correct.

Explanation of Solution

The equilibrium price is determined by the demand for the cost and the supply of cost, normally. The consumer surplus can be explained as 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. The producer surplus is the difference between the minimum willing to accept price by the seller and the actual price that the seller receives for the commodity.

The maximum willing to pay price by the consumer for the massage here is $300. The actual price that the consumer pays after the negotiation between the two is $200. Since the difference between the maximum willing to pay price and the actually paying price is the consumer surplus, it can be calculated as follows:

Consumer surplus=Maximum willing to pay price−Actually paying price=300−200=100

Thus, the consumer surplus is $100.

Similarly, the minimum willing to accept price by the massager is $60 per hour and she spends 2 hours for the service, which totally costs $120, minimum. But the actual amount received by her is $200; this difference between the actual price received by the seller and the minimum willing to accept price is the producer surplus, which can be calculated as follows:

Producer surplus=Actually received price−Minimum willing to accept price=200−(60×2)=200−120=80

Thus, the producer surplus is $80.

Option (a):

Here, the consumer surplus is $100 from receiving the massage from the producer and the producer surplus is $80 by providing the massage service to the consumer. The difference between the consumer surplus and the producer surplus is $20. This means that the consumer surplus is higher than the producer surplus by $20 and hence, option 'a' is correct.

Option (b):

Here, the consumer surplus is $100 from receiving the massage from the consumer and the producer surplus is $80 by providing the massage service to the consumer. This means that the consumer surplus is higher than the producer surplus by only $20. But the given value in option 'b' is $40, which is twice the actual value. Thus, option 'b' is incorrect.

Option (c):

The consumer surplus is $100 from receiving the massage from the consumer and the producer surplus is $80 by providing the massage service to the consumer. This means that the consumer surplus is higher than the producer surplus by $20. Option 'c' points that the producer surplus is higher than the consumer surplus by the value of $20, which is inverse to the actual situation. Thus, option 'c' is incorrect.

Option (d):

The consumer surplus is $100 from receiving the massage from the producer and the producer surplus is $80 by providing the massage service to the consumer. The difference between the consumer surplus and the producer surplus is $20. The consumer surplus is $20 more than the producer surplus. Since option 'd' argues that the producer surplus is $40 larger than the consumer surplus, option 'd' is incorrect.

Economics Concept Introduction

Concept introduction:

Consumer surplus: It is the difference between the highest willing to pay 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 that is received by the producer.

Equilibrium price: It is the market price determined by equating the supply to the demand. At this equilibrium point, the supply will be equal to the demand and there will be no excess demand or excess supply in the economy. Thus, the economy will be at equilibrium.

Want to see more full solutions like this?

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 7, Problem 1CQQ

To determine

The consumer surplus and the producer surplus.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'a' is correct.

Explanation of Solution

The equilibrium price is determined by the demand for the cost and the supply of cost, normally. The consumer surplus can be explained as 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. The producer surplus is the difference between the minimum willing to accept price by the seller and the actual price that the seller receives for the commodity.

The maximum willing to pay price by the consumer for the massage here is $300. The actual price that the consumer pays after the negotiation between the two is $200. Since the difference between the maximum willing to pay price and the actually paying price is the consumer surplus, it can be calculated as follows:

Consumer surplus=Maximum willing to pay price−Actually paying price=300−200=100

Thus, the consumer surplus is $100.

Similarly, the minimum willing to accept price by the massager is $60 per hour and she spends 2 hours for the service, which totally costs $120, minimum. But the actual amount received by her is $200; this difference between the actual price received by the seller and the minimum willing to accept price is the producer surplus, which can be calculated as follows:

Producer surplus=Actually received price−Minimum willing to accept price=200−(60×2)=200−120=80

Thus, the producer surplus is $80.

Option (a):

Here, the consumer surplus is $100 from receiving the massage from the producer and the producer surplus is $80 by providing the massage service to the consumer. The difference between the consumer surplus and the producer surplus is $20. This means that the consumer surplus is higher than the producer surplus by $20 and hence, option 'a' is correct.

Option (b):

Here, the consumer surplus is $100 from receiving the massage from the consumer and the producer surplus is $80 by providing the massage service to the consumer. This means that the consumer surplus is higher than the producer surplus by only $20. But the given value in option 'b' is $40, which is twice the actual value. Thus, option 'b' is incorrect.

Option (c):

The consumer surplus is $100 from receiving the massage from the consumer and the producer surplus is $80 by providing the massage service to the consumer. This means that the consumer surplus is higher than the producer surplus by $20. Option 'c' points that the producer surplus is higher than the consumer surplus by the value of $20, which is inverse to the actual situation. Thus, option 'c' is incorrect.

Option (d):

The consumer surplus is $100 from receiving the massage from the producer and the producer surplus is $80 by providing the massage service to the consumer. The difference between the consumer surplus and the producer surplus is $20. The consumer surplus is $20 more than the producer surplus. Since option 'd' argues that the producer surplus is $40 larger than the consumer surplus, option 'd' is incorrect.

Economics Concept Introduction

Concept introduction:

Consumer surplus: It is the difference between the highest willing to pay 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 that is received by the producer.

Equilibrium price: It is the market price determined by equating the supply to the demand. At this equilibrium point, the supply will be equal to the demand and there will be no excess demand or excess supply in the economy. Thus, the economy will be at equilibrium.

Want to see more full solutions like this?

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 7, Problem 1CQQ

To determine

The consumer surplus and the producer surplus.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'a' is correct.

Explanation of Solution

The equilibrium price is determined by the demand for the cost and the supply of cost, normally. The consumer surplus can be explained as 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. The producer surplus is the difference between the minimum willing to accept price by the seller and the actual price that the seller receives for the commodity.

The maximum willing to pay price by the consumer for the massage here is $300. The actual price that the consumer pays after the negotiation between the two is $200. Since the difference between the maximum willing to pay price and the actually paying price is the consumer surplus, it can be calculated as follows:

Consumer surplus=Maximum willing to pay price−Actually paying price=300−200=100

Thus, the consumer surplus is $100.

Similarly, the minimum willing to accept price by the massager is $60 per hour and she spends 2 hours for the service, which totally costs $120, minimum. But the actual amount received by her is $200; this difference between the actual price received by the seller and the minimum willing to accept price is the producer surplus, which can be calculated as follows:

Producer surplus=Actually received price−Minimum willing to accept price=200−(60×2)=200−120=80

Thus, the producer surplus is $80.

Option (a):

Here, the consumer surplus is $100 from receiving the massage from the producer and the producer surplus is $80 by providing the massage service to the consumer. The difference between the consumer surplus and the producer surplus is $20. This means that the consumer surplus is higher than the producer surplus by $20 and hence, option 'a' is correct.

Option (b):

Here, the consumer surplus is $100 from receiving the massage from the consumer and the producer surplus is $80 by providing the massage service to the consumer. This means that the consumer surplus is higher than the producer surplus by only $20. But the given value in option 'b' is $40, which is twice the actual value. Thus, option 'b' is incorrect.

Option (c):

The consumer surplus is $100 from receiving the massage from the consumer and the producer surplus is $80 by providing the massage service to the consumer. This means that the consumer surplus is higher than the producer surplus by $20. Option 'c' points that the producer surplus is higher than the consumer surplus by the value of $20, which is inverse to the actual situation. Thus, option 'c' is incorrect.

Option (d):

The consumer surplus is $100 from receiving the massage from the producer and the producer surplus is $80 by providing the massage service to the consumer. The difference between the consumer surplus and the producer surplus is $20. The consumer surplus is $20 more than the producer surplus. Since option 'd' argues that the producer surplus is $40 larger than the consumer surplus, option 'd' is incorrect.

Economics Concept Introduction

Concept introduction:

Consumer surplus: It is the difference between the highest willing to pay 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 that is received by the producer.

Equilibrium price: It is the market price determined by equating the supply to the demand. At this equilibrium point, the supply will be equal to the demand and there will be no excess demand or excess supply in the economy. Thus, the economy will be at equilibrium.

Want to see more full solutions like this?

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

Answer 5

Chapter 7, Problem 1CQQ

To determine

The consumer surplus and the producer surplus.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'a' is correct.

Explanation of Solution

The equilibrium price is determined by the demand for the cost and the supply of cost, normally. The consumer surplus can be explained as 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. The producer surplus is the difference between the minimum willing to accept price by the seller and the actual price that the seller receives for the commodity.

The maximum willing to pay price by the consumer for the massage here is $300. The actual price that the consumer pays after the negotiation between the two is $200. Since the difference between the maximum willing to pay price and the actually paying price is the consumer surplus, it can be calculated as follows:

Consumer surplus=Maximum willing to pay price−Actually paying price=300−200=100

Thus, the consumer surplus is $100.

Similarly, the minimum willing to accept price by the massager is $60 per hour and she spends 2 hours for the service, which totally costs $120, minimum. But the actual amount received by her is $200; this difference between the actual price received by the seller and the minimum willing to accept price is the producer surplus, which can be calculated as follows:

Producer surplus=Actually received price−Minimum willing to accept price=200−(60×2)=200−120=80

Thus, the producer surplus is $80.

Option (a):

Here, the consumer surplus is $100 from receiving the massage from the producer and the producer surplus is $80 by providing the massage service to the consumer. The difference between the consumer surplus and the producer surplus is $20. This means that the consumer surplus is higher than the producer surplus by $20 and hence, option 'a' is correct.

Option (b):

Here, the consumer surplus is $100 from receiving the massage from the consumer and the producer surplus is $80 by providing the massage service to the consumer. This means that the consumer surplus is higher than the producer surplus by only $20. But the given value in option 'b' is $40, which is twice the actual value. Thus, option 'b' is incorrect.

Option (c):

The consumer surplus is $100 from receiving the massage from the consumer and the producer surplus is $80 by providing the massage service to the consumer. This means that the consumer surplus is higher than the producer surplus by $20. Option 'c' points that the producer surplus is higher than the consumer surplus by the value of $20, which is inverse to the actual situation. Thus, option 'c' is incorrect.

Option (d):

The consumer surplus is $100 from receiving the massage from the producer and the producer surplus is $80 by providing the massage service to the consumer. The difference between the consumer surplus and the producer surplus is $20. The consumer surplus is $20 more than the producer surplus. Since option 'd' argues that the producer surplus is $40 larger than the consumer surplus, option 'd' is incorrect.

Economics Concept Introduction

Concept introduction:

Consumer surplus: It is the difference between the highest willing to pay 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 that is received by the producer.

Equilibrium price: It is the market price determined by equating the supply to the demand. At this equilibrium point, the supply will be equal to the demand and there will be no excess demand or excess supply in the economy. Thus, the economy will be at equilibrium.

Answer 6

Chapter 7, Problem 1CQQ

To determine

The consumer surplus and the producer surplus.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'a' is correct.

Explanation of Solution

The equilibrium price is determined by the demand for the cost and the supply of cost, normally. The consumer surplus can be explained as 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. The producer surplus is the difference between the minimum willing to accept price by the seller and the actual price that the seller receives for the commodity.

The maximum willing to pay price by the consumer for the massage here is $300. The actual price that the consumer pays after the negotiation between the two is $200. Since the difference between the maximum willing to pay price and the actually paying price is the consumer surplus, it can be calculated as follows:

Consumer surplus=Maximum willing to pay price−Actually paying price=300−200=100

Thus, the consumer surplus is $100.

Similarly, the minimum willing to accept price by the massager is $60 per hour and she spends 2 hours for the service, which totally costs $120, minimum. But the actual amount received by her is $200; this difference between the actual price received by the seller and the minimum willing to accept price is the producer surplus, which can be calculated as follows:

Producer surplus=Actually received price−Minimum willing to accept price=200−(60×2)=200−120=80

Thus, the producer surplus is $80.

Option (a):

Here, the consumer surplus is $100 from receiving the massage from the producer and the producer surplus is $80 by providing the massage service to the consumer. The difference between the consumer surplus and the producer surplus is $20. This means that the consumer surplus is higher than the producer surplus by $20 and hence, option 'a' is correct.

Option (b):

Here, the consumer surplus is $100 from receiving the massage from the consumer and the producer surplus is $80 by providing the massage service to the consumer. This means that the consumer surplus is higher than the producer surplus by only $20. But the given value in option 'b' is $40, which is twice the actual value. Thus, option 'b' is incorrect.

Option (c):

The consumer surplus is $100 from receiving the massage from the consumer and the producer surplus is $80 by providing the massage service to the consumer. This means that the consumer surplus is higher than the producer surplus by $20. Option 'c' points that the producer surplus is higher than the consumer surplus by the value of $20, which is inverse to the actual situation. Thus, option 'c' is incorrect.

Option (d):

The consumer surplus is $100 from receiving the massage from the producer and the producer surplus is $80 by providing the massage service to the consumer. The difference between the consumer surplus and the producer surplus is $20. The consumer surplus is $20 more than the producer surplus. Since option 'd' argues that the producer surplus is $40 larger than the consumer surplus, option 'd' is incorrect.

Economics Concept Introduction

Concept introduction:

Consumer surplus: It is the difference between the highest willing to pay 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 that is received by the producer.

Equilibrium price: It is the market price determined by equating the supply to the demand. At this equilibrium point, the supply will be equal to the demand and there will be no excess demand or excess supply in the economy. Thus, the economy will be at equilibrium.

Answer 7

Chapter 7, Problem 1CQQ

To determine

The consumer surplus and the producer surplus.

Answer 8

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'a' is correct.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

The equilibrium price is determined by the demand for the cost and the supply of cost, normally. The consumer surplus can be explained as 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. The producer surplus is the difference between the minimum willing to accept price by the seller and the actual price that the seller receives for the commodity.

The maximum willing to pay price by the consumer for the massage here is $300. The actual price that the consumer pays after the negotiation between the two is $200. Since the difference between the maximum willing to pay price and the actually paying price is the consumer surplus, it can be calculated as follows:

Consumer surplus=Maximum willing to pay price−Actually paying price=300−200=100

Thus, the consumer surplus is $100.

Similarly, the minimum willing to accept price by the massager is $60 per hour and she spends 2 hours for the service, which totally costs $120, minimum. But the actual amount received by her is $200; this difference between the actual price received by the seller and the minimum willing to accept price is the producer surplus, which can be calculated as follows:

Producer surplus=Actually received price−Minimum willing to accept price=200−(60×2)=200−120=80

Thus, the producer surplus is $80.

Option (a):

Here, the consumer surplus is $100 from receiving the massage from the producer and the producer surplus is $80 by providing the massage service to the consumer. The difference between the consumer surplus and the producer surplus is $20. This means that the consumer surplus is higher than the producer surplus by $20 and hence, option 'a' is correct.

Option (b):

Here, the consumer surplus is $100 from receiving the massage from the consumer and the producer surplus is $80 by providing the massage service to the consumer. This means that the consumer surplus is higher than the producer surplus by only $20. But the given value in option 'b' is $40, which is twice the actual value. Thus, option 'b' is incorrect.

Option (c):

The consumer surplus is $100 from receiving the massage from the consumer and the producer surplus is $80 by providing the massage service to the consumer. This means that the consumer surplus is higher than the producer surplus by $20. Option 'c' points that the producer surplus is higher than the consumer surplus by the value of $20, which is inverse to the actual situation. Thus, option 'c' is incorrect.

Option (d):

The consumer surplus is $100 from receiving the massage from the producer and the producer surplus is $80 by providing the massage service to the consumer. The difference between the consumer surplus and the producer surplus is $20. The consumer surplus is $20 more than the producer surplus. Since option 'd' argues that the producer surplus is $40 larger than the consumer surplus, option 'd' is incorrect.

Answer 12

Economics Concept Introduction

Concept introduction:

Consumer surplus: It is the difference between the highest willing to pay 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 that is received by the producer.

Equilibrium price: It is the market price determined by equating the supply to the demand. At this equilibrium point, the supply will be equal to the demand and there will be no excess demand or excess supply in the economy. Thus, the economy will be at equilibrium.

Answer 13

Ch. 7.1 - Prob. 1QQ Ch. 7.2 - Prob. 2QQ Ch. 7.3 - Prob. 3QQ Ch. 7 - Prob. 1CQQ Ch. 7 - Prob. 2CQQ Ch. 7 - Prob. 3CQQ Ch. 7 - Prob. 4CQQ Ch. 7 - Prob. 5CQQ Ch. 7 - Prob. 6CQQ Ch. 7 - Prob. 1QR

The consumer surplus and the producer surplus .

Solution Summary: The author explains the difference between the consumer surplus and the producer surplus.

The consumer surplus and the producer surplus.

Answer to Problem 1CQQ

Explanation of Solution

Want to see more full solutions like this?

Chapter 7 Solutions