(7 Points)Consider the following market for flash drives.Price   Quantity supplied  Quantity demanded$65              3,000                              0$60              2,750                         250$55              2,500                         500$50              2,250                         750$45              2,000                      1,000$40              1,750                      1,250$35              1,500                      1,500$30              1,250                      1,750$25              1,000                      2,000$20               750                        2,250$15               500                        2,500$10               250                        2,750$5                     0                         3,000$0                     0                         3,250 What is the consumer surplus in the equilibrium?Suppose there is an increase in the cost of producing flash drives such that the quantity supplied decreases by 1,000 units for each price. What is the consumer surplus at the new equilibrium?

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Asked Oct 29, 2019
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  1. (7 Points)

Consider the following market for flash drives.

Price   Quantity supplied  Quantity demanded

$65              3,000                              0

$60              2,750                         250

$55              2,500                         500

$50              2,250                         750

$45              2,000                      1,000

$40              1,750                      1,250

$35              1,500                      1,500

$30              1,250                      1,750

$25              1,000                      2,000

$20               750                        2,250

$15               500                        2,500

$10               250                        2,750

$5                     0                         3,000

$0                     0                         3,250

 

  1. What is the consumer surplus in the equilibrium?
  2. Suppose there is an increase in the cost of producing flash drives such that the quantity supplied decreases by 1,000 units for each price.

 

What is the consumer surplus at the new equilibrium?

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a) By considering the given data, the graph for the market of flash lights can be drawn as follows, where 'E' is the equilibrium of this market.

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65 60 55 50 45 Consumer surphus 40 E 35 Price 30 25 20 15 10 5 250 500 750 1000 1250 1500 1750 2000 2250 2500 2750 3000 3250 3500 Output Figure 1

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In economics, the term consumers surplus (CS) refers to the benefit that a consumer receives by paying less than their willingness to pay. It can be mathematically expressed as follows. Consumer surplus- x(Willingness to pay -Price)x Quantity 2 (65-35)x1500 = 22,500

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