Chapter 7
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