Consider a buyer and a seller meeting to exchange a product. The seller has a minimum willing to sell ( WTS) of $20.00, while the buyer has a maximum willingness to pay ( WTP) of $65.00. If they agree on the price ( P) of $33.40, then the producer surplus is $. WTS WTP 10 20 30 40 50 60 70 80 90 O A. 13.40 O B. 2290 O C. 22.40 O D. 22.15
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A: Total surplus = Consumer Surplus + Producer Surplus Consumer Surplus=12×Quantity×(Maximum price…
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A: Given: Qd = 60,000 − 400P and QSD = 20,000 + 500P
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A: Given
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Q: COUNTRY 1 INTERNATIONAL MARKET COUNTRY 2 25 25 25 S2 20 s2 20 20 15 15 S1 15 s1 FIP IP IP 10 10 10…
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A: Consumer surplus is the difference between willingness to pay for a good and its actual price.
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A: Equilibrium is achieved at the output level where Qs equals Qd. Thus Q*= 2000 units and P*= $ 10
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- Suppose that there are three beachfront parcels of land available for sale in Asilomar and six people who would each like to purchase one parcel. Assume that the parcels are essentially identical and that the minimum selling price of each is $445,000. The following table states each person's willingness and ability to purchase a parcel. Person Willingness and Ability to Purchase (Dollars) Ana 510,000 Charles 470,000 Dina 420,000 Gilberto 390,000 Juanita 380,000 Yakov 600,000 Which of these people will buy one of the three beachfront parcels? Check all that apply. A. Ana B. Charles C. Dina D. Gilberto E. Juanita F. Yakov Assume that the three beachfront parcels are sold to the people that you indicated in the previous section. Suppose that a few days after the last of those beachfront parcels is sold, another essentially identical beachfront parcel becomes available for sale at a minimum price of $432,500. This fourth…In the market for a pair of shoes, Jena is willing to pay $75 for a pair while Jane is willing to pay $85 for a pair. The actual price that each must pay for a pair of shoes is $65. What is the combined amount of consumer surplus of Jena and Jane? Multiple Choice $10 $160 $30 $20JetBlue and Delta are the only two major airlines with regularly scheduled service between New York and Nantucket. There are 900 potential passengers every week, each of whom is willing to pay up to $400 for a ticket. Since the two airlines provide an essentially identical (bad) service, customers simply prefer to buy from the cheaper one. (If they charge the same price, then they will split the market equally.) Each airline can transport at most 1200 passengers each week. You can safely assume that each airline spends literal peanuts (i.e., zero) serving passengers; however, each passenger displaces air cargo that is worth $160 in profits to the carriers. Suppose that each airline takes a short-run perspective and only wants to maximize each week's profits, and that neither one would consider shutting down the route in the foreseeable future. (a) What is the appropriate economic model to study price competition in this market? (b) If you use Nash equilibrium to make a prediction, what…
- JetBlue and Delta are the only two major airlines with regularly scheduled service between New York and Nantucket. There are 900 potential passengers every week, each of whom is willing to pay up to $400 for a ticket. Since the two airlines provide an essentially identical (bad) service, customers simply prefer to buy from the cheaper one. (If they charge the same price, then they will split the market equally.) Each airline can transport at most 1200 passengers each week. You can safely assume that each airline spends literal peanuts (i.e., zero) serving passengers; however, each passenger displaces air cargo that is worth $160 in profits to the carriers. Suppose that each airline takes a short-run perspective and only wants to maximize each week's profits, and that neither one would consider shutting down the route in the foreseeable future. (a) What is the appropriate economic model to study price competition in this market? (b) If you use Nash equilibrium to make a prediction, what…JetBlue and Delta are the only two major airlines with regularly scheduled service between New York and Nantucket. There are 900 potential passengers every week, each of whom is willing to pay up to $400 for a ticket. Since the two airlines provide an essentially identical (bad) service, customers simply prefer to buy from the cheaper one. (If they charge the same price, then they will split the market equally.) Each airline can transport at most 1200 passengers each week. You can safely assume that each airline spends literal peanuts (i.e., zero) serving passengers; however, each passenger displaces air cargo that is worth $160 in profits to the carriers. Suppose that each airline takes a short-run perspective and only wants to maximize each week’s profits, and that neither one would consider shutting down the route in the foreseeable future. a) What is the appropriate economic model to study price competition in this market, and why? b) If you use Nash equilibrium to make a…When the market mechanism is allowed to operate freely, prices will determine: a. Only the mix of output to be poduced and the resources to be used in the production process.b. Only the resources to be used in the production process and for whom the output is produced.c. The mix of output to be produced, the resources to be used in the production process, and for whom the output isproduced.d. Only for whom the output is produced and the mix of output to be produced.
- In Rivendell live the finest jewellery making elves. The local demand and supply of jewelleries in Revendell are given by QD = 16–3P QS = 5P. We assume the market in Rivendell is perfectly competitive. The jewelleries are highly desired by men, and the price is PW=3 in human society. Assume the elves in Rivendell are price takers. To increase the producers’surplus back to the pre-Covid level, Elrond, the King of Rivendell, decides to subsidize the elves withthe price difference s=PW-PCE for every unit of jewellery they make. Recall that PCE $2. Calculate the price that the sellers receive, the price the consumers pay, and the quantity traded in the equilibrium after the introduction of subsidy. Use a demand and supply diagram to explain your answers.Suppose that you pay $4 for a delicious burrito. It was so good that you would have been willing to pay $10 for it. How much is your economic (consumer) surplus from this purchase? Group of answer choices $10 $6 $14 $0 $4which statement is true In the absence of market power and externalities, efficiency is achieved in a market when the sum of producer surplus and consumer surplus is maximized. The benefit received by sellers in a market is measured by producer surplus and producer surplus is calculated as the amount sellers receive for their product minus the cost of production. In a market, the marginal buyer is the buyer who would be the first to leave the market if the price were any higher. Moving production from a high-cost producer to a low-cost producer will decrease total surplus. Suppose the United States changed its laws to allow for the legal sale of a kidney and the government allowed a free market in organs for transplant then there would be a decrease in the price of a kidney and an increase in the shortage of kidneys for transplant. Total surplus in the market is the summation of consumer surplus and producer surplus and it is maximized at the market equilibrium in the absence of…
- Pharmaceutical Benefits Managers (PBMs) are intermediaries between upstream drug manufacturers and downstream insurance companies. They design formularies (lists of drugs that insurance will cover) and negotiate prices with drug companies. PBMs want a wider variety of drugs available to their insured populations, but at low prices. Suppose that a PBM is negotiating with the makers of two non-drowsy allergy drugs, Claritin and Allegra, for inclusion on the formulary. The “value” or “surplus” created by including one non-drowsy allergy drug on the formulary is $80 million, but the value of adding a second drug is only $24 million. Assume the PBM bargains by telling each drug company that it's going to reach an agreement with the other drug company. Under the non-strategic view of bargaining, the PBM would earn a surplus of_____million, while each drug company would earn a surplus of ________million. Now suppose the two drug companies merge. What is the likely post merger bargaining…Competitive Markets and Externalities 1.What impact do policy interventions have on the supply and demand equilibrium for a product? Provide specific examples 2.What are the determinants of price elasticity of demand? Identify at least three examples? 3.Explain how price elasticity can impact pricing decisions and total revenue of the firm? 4.can policy market interventions cause consumer or producer surplus? Explain why using specific reasoning.Consider a nonrenewable resource that can be consumed either today (period 1) or tomorrow (period 2) and has a finite supply of 4 units. Assume the inverse demand for the resource in both periods is: P_1 = 30 - 5Q_1 P_2 = 30 - 5Q_2 Assume the marginal cost of extracting the resource is constant at $10 and the social discount rate is 20 percent (r = .2). Assuming the resource is allocated efficiently, what is the consumer surplus in period 1? Please report your answer out to at least two digits (e.g., 3.24).