Consumer and Producer Surplus

Consumer surplus is

the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it

Producer surplus is

the amount a seller is paid minus the cost of production.

Table 7-10 The following table represents the costs of five possible sellers. SellerCostAbby$1,600Bobby$1,300Dianne$1,100Evaline$900Carlos$800 Refer to Table 7-10. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 4 if the price is

1,400

Figure 7-11 Refer to Figure 7-11.If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus?

2,500

Table 7-10 The following table represents the costs of five possible sellers. SellerCostAbby$1,600Bobby$1,300Dianne$1,100Evaline$900Carlos$800 Refer to Table 7-10. If the market price is $1,000, the producer surplus in the market is

300

Table 7-1 BuyerWillingness To PayCalvin$150.00Sam$135.00Andrew$120.00Lori$100.00 Refer to Table 7-1. If the price of the product is $122, then the total consumer surplus is

41

Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be

45

Figure 7-11 Refer to Figure 7-11.If the supply curve is S', the demand curve is D, and the equilibrium price is $150, what is the producer surplus?

625

Figure 7-3 Refer to Figure 7-3. When the price is P2, consumer surplus is

A

Figure 7-3 Refer to Figure 7-3. When the price is P1, consumer surplus is

A+B+C.

Table 7-1 BuyerWillingness To PayCalvin$150.00Sam$135.00Andrew$120.00Lori$100.00 Refer to Table 7-1. If the price of the product is $130, then who would be willing to purchase the product?

Calvin and Sam

Table 7-10 The following table represents the costs of five possible sellers. SellerCostAbby$1,600Bobby$1,300Dianne$1,100Evaline$900Carlos$800 Refer to Table 7-10. If the price is $1,l50, who would be willing to supply the product?

Carlos, Dianne, and Evaline

able 7-1 BuyerWillingness To PayCalvin$150.00Sam$135.00Andrew$120.00Lori$100.00 Refer to Table 7-1. If the market price is $105,

Sam's consumer surplus is $30 and total consumer surplus is $90.

On a graph, the area below a demand curve and above the price measures

consumer surplus.

Figure 7-3 Refer to Figure 7-3. When the price rises from P1 to P2, consumer surplus

decreases by an amount equal to B+C.