When the market price is equal to the minimum value of the average variable cost curve marginal revenue equals average variable cost the firm covers its fixed costs of production marginal cost is greater than average variable cost average cost is less than average variable cost Which of the following best explains the source of consumer surplus for a good? Many consumers pav prices that are greater than the equilibrium price of the good

When the market price is equal to the minimum value of the average variable cost curve marginal revenue equals average variable cost the firm covers its fixed costs of production marginal cost is greater than average variable cost average cost is less than average variable cost Which of the following best explains the source of consumer surplus for a good? Many consumers pav prices that are greater than the equilibrium price of the good

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 10PA

See similar textbooks

Similar questions

What is producer surplus? How is it illustrated on a demand and supply diagram?
With its new global mobile phone service, Ultra Mobile offers the following price schedule: Your first 10 minutes each day cost 25 cents per minute. All minutes after that are just 10 cents per minute. There are no additional charges, and no contract to sign or fixed monthly fees.If Peter's demand for global phone minutes is P = 20 − 4Q, where P is in cents per minute and Q is in minutes per day, what is Peter’s daily consumer surplus? 0 2.5 12.5 25 50
Suppose that the demand for broccoli is given by: Q=1000-5P where Q is quantity per year measured in hundreds of bushels and P is the price in dollars per hundred bushels. The long-run supply curve for broccoli is given by: Q=4P-80 Show that the equilibrium quantity here is Q= 400. At this output, what is the equilibrium price? How much in total is spent on broccoli? What is consumer surplus at this equilibrium? What is producer surplus at this equilibrium? How much in total consumer and producer surplus would be lost if Q= 300 instead of Q= 400? Show how the allocation between suppliers and demanders of the loss of total consumer and producer surplus described in part (b) depends on the price at which broccoli is sold. How would the loss be shared if P= 140? How about if P= 95? What would be the total loss of consumer and producer surplus if Q= 450 rather than Q= 400? Show that the size of this total loss also is independent of the price at which the broccoli is sold. Now suppose the…
You are planning a move across town. Doing your research you find that the average rate of a moving company is $250 per hour for two movers (moving truck included). The marginal benefit you receive from each hour of the two movers’ time (and truck) is listed in the accompanying table. Hours of movers’ time Marginal benefit 1 hour $850 2 hours $620 3 hours $500 4 hours $250 5 hours $150 6 hours $100 7 hours $0 For how many hours should you hire the movers? How much consumer surplus do you receive? Now suppose that instead of paying per hour, a moving company offers a flat rate of $1,500 for two movers plus a truck for an eight-hour day. Would you hire the movers? How has your consumer surplus changed?
Q32 Let's assume we are referring to the Canadian market for Random Access Memory (RAM) storage. If the price of RAM increases: Multiple Choice total revenue for RAM producers will decrease if demand for RAM is price inelastic. the consumer surplus for Canadian consumer will decrease. consumers will buy more because RAM is an inferior good. the consumer surplus of Canadian will increase. total revenue for RAM producers will increase if demand for RAM is price elastic.
The market for used phones is perfectly competitive. The Marginal Willingness to pay (MWTP) and the Marginal Costs (MC) for the buyers and sellers in used phon market are given in the table below. If they buy a phone, each buyer purchases only 1 phone. If they sell a phone, each seller sells only 1 phone. What is Total Surplus in the used phone? Remember all market trades are voluntary. Enter a number only. Do not enter the $ sign.
The market for used phones is perfectly competitive. The Marginal Willingness to pay (MWTP) and the Marginal Costs (MC) for the buyers and sellers in used phone market are given in the table below. If they buy a phone, each buyer purchases only 1 phone. If they sell a phone, each seller sells only 1 phone. What is Total Surplus in the used phone? Remember all market trades are voluntary. Enter a number only. Do not enter the $ sign.
When the price of gasoline was very high in thesummer of 2008, several U.S. presidential candidates proposed implementing a national price ceiling to keep fuel affordable. How would this policyhave affected producer and consumer surplus?How would it have affected total surplus?
The demand curve for product X is given by QXd = 480 - 2PX. Instruction: Enter all values as integers, or if needed, as a decimal.a. Find the inverse demand curve. Instructions: Enter your responses to the nearest penny (two decimal places).b. How much consumer surplus do consumers receive when Px = $50?c. How much consumer surplus do consumers receive when Px = $30?d. In general, what happens to the level of consumer surplus as the price of a good falls?(choose one) The level of consumer surplus; increases, doesn't change, or decreases as the price of a good falls?
what do you understand by consumer and prducer surplus ?what is the impact of price decrease on consumer surplus?and on producer surplus.show graphically and interpret.
Suppose the demand for pickles on The Citadel is Qd=500-4P, and the supply is Qs=6P. Assume this market is perfectly competitive.a. On the back of the page, graph the supply and demand curves.b. Solve for the equilibrium price and quantity of tents. Show this point on your graph from part (a). c. How much consumer surplus is created in this market? How much producer surplus? d. Suppose the Council puts a tax of $5 per unit on the purchase of pickles. Write an equation showing the relationship between the price paid by consumers and the price received by producers. e. Find the new (after-tax) equilibrium quantity of pickles, price paid by consumers, and price received by producers. f. How much consumer surplus is created by this market after the tax? How much producer surplus?g. How much tax revenue is generated by this tax? How much deadweight loss does the tax cause?
The second column shows Shane’s marginal value schedule, which is also his demand schedule when he is offered a single price and can buy as many donuts as he wants at that price. The third column shows Miriam’s marginal cost schedule. Answer the following questions, and include a couple of sentences providing an explanation for your answer. If Miriam can charge a different price for different quantities, and if she is trying to maximize her producer surplus how many donuts will she sell? Does your answer to (a.) violate our result that profit is maximized by setting the quantity where marginal revenue equals marginal cost?