Explain the Consumer Surplus and Producer Surplus concept. Why this surplus concept is important in the market analysis? How price changes create inequilibrium in the market?
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- Explain the origin of both consumer surplus and producer surplus and explain how properly functioning markets maximize their sum, total surplus, while optimally allocating resources.The total surplus (consumer surplus plus producer surplus) is greatest when which of the following occurs? a.Producer surplus is maximized. b.Consumer surplus is maximized. c.All of these are correct d.The market is at equilibrium.When a market is competitive and functioning properly, economic theory predicts that the market equilibrium will be efficient. However, this may not always be the desired outcome. Market outcomes may be unequal or distorted by market failure. please answer this below. What effect will this solution have on consumer surplus, producer surplus, social surplus, and deadweight loss? Explain.
- When a market is competitive and functioning properly, economic theory predicts that the market equilibrium will be efficient. However, this may not always be the desired outcome. Market outcomes may be unequal or distorted by market failure. What effect will this solution have on consumer surplus, producer surplus, social surplus, and deadweight loss? Explain.What is the maximum price consumers are willing to pay for the 25th hot dog? At the market equilibrium, what are the consumer surplus, producer surplus and total surplus? Show your steps.COURSE: Microeconomics When a market is in equilibrium, consumer surplus will equal producer surplus. Comment on the truth or falsity of the statement.
- which statement is correct 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 market power and externalities. If a good is not being produced by sellers with the lowest cost, then the market reflects inefficiency in the allocation of resources. Welfare economics deals with how the allocation of resources affects economic well-being. The willingness to pay is a measure of how much the buyer values the good. The marginal seller is the seller who would leave the market first if the price were any higher.Interaction of demand and supply = Markets: Definition of markets Equilibrium market clearing price and quantity Diagrams/analysis/explanations of changes in demand and supply to show the adjustment to a new equilibrium Market efficiency: Allocative efficiency Community surplus Consumer surplus Producer surplus Identify these areas on a diagram Calculate consumer/producer/community surplusThe following diagram shows supply and demand in the market for smartphones. Use the black point (plus symbol) to indicate the equilibrium price and quantity of smartphones. Then use the green point (triangle symbol) to fill the area representing consumer surplus, and use the purple point (diamond symbol) to fill the area representing producer surplus. Total surplus in this market is _______ million. Complete all problems in attachment.
- The following diagram shows supply and demand in the market for smartphones. Use the black point (plus symbol) to indicate the equilibrium price and quantity of smartphones. Then use the green point (triangle symbol) to fill the area representing consumer surplus, and use the purple point (diamond symbol) to fill the area representing producer surplus. Total surplus in this market is ________ million.In the market for pizza, both consumer surplus and producer surplus will increase when the price of a pizza increases from $3 to $6. O True FalseWhat is the value of consumer surplus? What is the value of producer surplus?
