Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 8, Problem 2CQQ
To determine
The change in consumer surplus , producer surplus and deadweight loss .
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Sofia pays Sam $50 to mow her lawn every week. When the government levies a mowing tax of $10 on Sam, he raises his price to $60. Sofia continues to hire him at the higher price. What is the change in producer surplus, change in consumer surplus, and deadweight loss?a. $0, $0, $10b. $0, −$10, $0c. +$10, −$10, $10d. +$10, −$10, $0
Ryan would be willing to pay $1 for a lollipop. Sarah would be willing to pay $0.50. The price of the lollipop is $0.75.
What is Ryan and Sarah's combined consumer surplus?
a. $0
b. $0.25
c. $0.50
d. $0.75
Can someone please explain to me why the correct answer here is $0.25?
I did the calculations and i keep getting $0
the follwing is my calculations
Demand
A. $100 thousand
B. $200 thousand
OC. $600 thousand
D. $800 thousand
Supply
1
P= 50+
P=80-QD
QD=80-P QS=2P-100
The equations above describe the demand and supply for Chef Emnie's Sushi-on-a-Stick. The
equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units. What is the
value of producer surplus?
Chapter 8 Solutions
Principles of Microeconomics
Ch. 8.1 - Prob. 1QQCh. 8.2 - The demand for beer is more elastic than the...Ch. 8.3 - Prob. 3QQCh. 8 - Prob. 1CQQCh. 8 - Prob. 2CQQCh. 8 - Prob. 3CQQCh. 8 - Prob. 4CQQCh. 8 - Prob. 5CQQCh. 8 - Prob. 6CQQCh. 8 - Prob. 1QR
Ch. 8 - Prob. 2QRCh. 8 - Prob. 3QRCh. 8 - Why do experts disagree about whether labor taxes...Ch. 8 - What happens to the deadweight loss and tax...Ch. 8 - Prob. 1PACh. 8 - Prob. 2PACh. 8 - Prob. 3PACh. 8 - Prob. 4PACh. 8 - Prob. 5PACh. 8 - Prob. 6PACh. 8 - Prob. 7PACh. 8 - Prob. 8PACh. 8 - Prob. 9PACh. 8 - Prob. 10PA
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- C. With the price floor at $1.05 per pound of butter, show the areas that represent deadweight loss, consumer surplus, and producer surplus. Calculate each and show your work. Is total surplus higher or lower than in the free market? Price of butter (per pound) $1.20 1.15 1.10 1.05 1.00 Price floor 0.95 0.90 0.85 1.60 1.65 1.70 Quantity of butter (billions of pounds) %24arrow_forwardGavin has been working full-time as a gardener for$300 a week. When the market price of gardenersrises to $400, Hector becomes a gardener as well.How much does producer surplus rise as a result ofthis price increase?a. by less than $100b. between $100 and $200c. between $200 and $300d. by more than $300arrow_forwardwhat is the deadweight loss due to a $2 tax? a) 200 b) none 50 100 e) 150 7- Domestic supply 6- Domestic Demand 500 Quantity 5. 4- 2- 1. 100 200 300 400arrow_forward
- Figure 7-6 PRICE 0" A с D B (5) G QUANTITY Refer to Figure 7-6. Area A represents Supply producer surplus to new producers entering the market as the result of an increase in price from P₁ to P₂. the increase in consumer surplus that results from an upward-sloping supply curve. the increase in total surplus when sellers are willing and able to increase supply from Q₁ to Q₂- the increase in producer surplus to those producers already in the market when the price increases from P₁ to P₂.arrow_forward2.00 $18.75 $22.50 $11.25 -$15.00 $15.00 -$18.75 1.75 1.50 1.30 1.10 P 50 Sun Drop 100 S D The above diagram shows a market for a popular soft drink and how a tax will impact the market. Calculate the change in producer surplus.arrow_forwardFor each scenario, decide whether it results in a producer or consumer surplus. Then calculate the resulting surplus. Alice is willing to spend $30$30 on a pair of jeans and has a coupon for $10$10 off. She purchases a pair of jeans that costs $35$35 pre-discount. Alice receives a Alice's surplus: $ Jeff finds steak in the supermarket priced at$16$16 but that he would have been willing to pay $20$20 for. The butcher notices the meat is near the expiration date and gives him an extra 7575% off. Jeff receives a producer surplus. consumer surplus. Jeff's surplus: $ Nicole has a hockey puck from the 2018 Winter Olympic Games and puts it up for sale on eBay. She will only sell the puck if the winning bid is greater than or equal to $500$500. After the bidding closes, the last bid stands at $501$501. Nicole receives a Nicole's surplus: $arrow_forward
- Consider the supply and demand curves for taxi rides in the attached graph. At at price of $1.30 taxi companies earn a producer surplus of_____million dollars.arrow_forwardPrice (dollars per ticket) 140 120 100 80 60 40 20 CREMONINGS LEITE HEERAN LUKENT Market price 0 2 4 6 8 10 12 14 16 Quantity (thousands of tickets) The figure above shows that the total benefit equals $150.000: only the consumer surplus $500.000: only the consumer surplus ($900,000, consumer surplus plus the amount paid $100,000: consumer surplus minus the amount paidarrow_forwardpart C D Earrow_forward
- please answer #5 letter a and b.arrow_forwardThe diagram to the right shows a market in which a price floor has been imposed. Identify the K following (enter al values as integers). a. The deadweight loss in $. b. The transfer of consumer surplus to producers is $. c. Producer surplus with this price floor is d. Consumer surplus with this price floor is $20000 6.00 5.00 3.00 2.00 30,000 60,000 Quantity Demand dduarrow_forwardPrice $150 200 250 300 350 400 450 500 550 600 650 1. Equilibrium price $350 2. Quantity 50 3. Consumer Surplus? 6250 4. Producer Surplus? 6250 500 7. Remove the tax. Imposes a price floor $100 below the equilibrium price a Fiquilibrium price $350 and quantity? 50 Quantity Demanded 100 90 5. What is the total surplus? 12500 6. Suppose a $200 unit tax is placed on the good being sold. How much tax revenue is to be made? 4000 b. Resulting amount of surplus/shortage if any (0 if none) 0 8. Remove the price floor Impose a price ceiling $50 below the equilibrium price a Equilibrium price $350 and quantity? 50 b. Resulting amount of surplus/shortage (0 if none) o 80 70 60 50 40 30 20 10 0 Quantity Supplied 10 20 30 40 50 60 70 80 90 100 . How much deadweight loss is created (0 if none)?arrow_forward
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