Chapter 7

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When the price is P1, producer surplus is

c

If the government imposes a price floor of $110 in this market, then consumer surplus will decrease by

when it is a price floor you cant go below that price. so the tax revenue and dwl is what is being decreased. (110-70)*10= tax revenue (110-70)*(20-10)/2= dwl 400+200=$600 answer: $600

when the price is P2, consumer surplus is

A

At the equilibrium price, producer surplus is

(45-15)(10)/2= 150

At the equilibrium price, consumer surplus is

(65-45)*10/2 = 100

If the government imposes a price ceiling of $55 in this market, then total surplus will be

total surplus will be the same b/c it is a price ceiling. the price ceiling doesnt effect the market

total surplus in a market will increase when the government

removes a binding price ceiling from that market

If the supply curve is S' , the demand curve is D, and the equilibrium price is $150, what is the producer surplus?

(150-100)(25)/2= 625

if the government imposes a price floor of $55 in this market, the total surplus will be

187.50

If the government imposes a price floor of $55 in this market, then total surplus will be

62.5 lower than it would be without the price floor

When the price is P1,consurmer surplus is

A+B+C

When the price is P2, producer surplus is

A+B+C

At equilibrium price, total surplus is

PS+ CS= Total surplus (150)+(100)= 250

If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus?

look at S and d curve. (100-0)*50/2=2,500 PS=2500

When the price falls from P2 to P1, producer surplus

decreases to an amount equal to C

At the equilibrium price, consumer surplus is

(150-70) * 20/2= $800

A seller's willingness to sell is

Answer: all of the above - Measured by the sellers cost of production - related to her supply curve, just as a buyers willingness to buy is related to his demand curve - less than the price is received if producer surplus is a positive number

The maximum price that a buyer will pay for a good is called

willingness to pay


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