1. What is consumer surplus? How do we calculate it? Provide one real-wo to explain. 2. What is producer surplus? How do we calculate it? Provide one real-wor to explain. 3. Refer to the graph below: 30- Based on the graph information calculate: a. Consumer surplus, producer surplus, and total surplus at equilibrium. b. Calculate the consumer surplus when the price is $60 per unit. C. Analyze what happened to consumer surplus when the price increased per unit to S60 per unit. (for example, explain loss to the existing buyers the buyers who left the market).

Exploring Economics
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ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter7: Market Efficiency And Welfare
Section: Chapter Questions
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1) The welfare of a consumer is determined by the consumer surplus which is the difference
between the amount of money a consumer is willing to pay for a goods and the amount they
actually pay.
Step 2
Consumer surplus (CS) is obtained by subtracting the amount of money that a customer is
willing to pay for a commodity and amount of money that they actually pay. It is the area
above the equilibrium price and under the demand curve.
The consumer surplus can be computed as:
Consumer surplus = Willingness to pay - Price paid
Suppose John is willing to pay $90 for a book but the price of book is $80, so the consumer
surplus of John will be $10($90-$80).
Transcribed Image Text:Expert Answer Step 1 Note: We'll answer the first question since the exact one wasn't specified. Please submit a new question specifying the one you'd like answered. 1) The welfare of a consumer is determined by the consumer surplus which is the difference between the amount of money a consumer is willing to pay for a goods and the amount they actually pay. Step 2 Consumer surplus (CS) is obtained by subtracting the amount of money that a customer is willing to pay for a commodity and amount of money that they actually pay. It is the area above the equilibrium price and under the demand curve. The consumer surplus can be computed as: Consumer surplus = Willingness to pay - Price paid Suppose John is willing to pay $90 for a book but the price of book is $80, so the consumer surplus of John will be $10($90-$80).
Answer the following questions in your own words. Start a new thread while replying.
1. What is consumer surplus? How do we calculate it? Provide one real-world example
to explain.
2. What is producer surplus? How do we calculate it? Provide one real-world example
to explain.
3. Refer to the graph below:
Prio
90
Suply
30
30
20
10
Dend
10
20
Based on the graph information calculate:
a. Consumer surplus, producer surplus, and total surplus at equilibrium.
b. Calculate the consumer surplus when the price is $60 per unit.
C. Analyze what happened to consumer surplus when the price increased from $40
per unit to $60 per unit. (for example, explain loss to the existing buyers and loss to
the buyers who left the market).
Transcribed Image Text:Answer the following questions in your own words. Start a new thread while replying. 1. What is consumer surplus? How do we calculate it? Provide one real-world example to explain. 2. What is producer surplus? How do we calculate it? Provide one real-world example to explain. 3. Refer to the graph below: Prio 90 Suply 30 30 20 10 Dend 10 20 Based on the graph information calculate: a. Consumer surplus, producer surplus, and total surplus at equilibrium. b. Calculate the consumer surplus when the price is $60 per unit. C. Analyze what happened to consumer surplus when the price increased from $40 per unit to $60 per unit. (for example, explain loss to the existing buyers and loss to the buyers who left the market).
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