which statement is correct Price ceilings and price floors usually reduce the welfare of society because quantity demanded does not equal quantity supplied if the price control is binding. Suppose that at the equilibrium price of $50, the equilibrium quantity is 400 units and consumer surplus is $8,000. If the equilibrium price falls to $40 and the equilibrium quantity increased to 450 units then consumer surplus increases by $4,500. Assume there are only three sellers in a particular market. The cost of production for Alice is $95, for Ben it is $80 and for Carla it is $75
which statement is correct Price ceilings and price floors usually reduce the welfare of society because quantity demanded does not equal quantity supplied if the price control is binding. Suppose that at the equilibrium price of $50, the equilibrium quantity is 400 units and consumer surplus is $8,000. If the equilibrium price falls to $40 and the equilibrium quantity increased to 450 units then consumer surplus increases by $4,500. Assume there are only three sellers in a particular market. The cost of production for Alice is $95, for Ben it is $80 and for Carla it is $75
Chapter24: Perfect Competition
Section: Chapter Questions
Problem 10E
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which statement is correct
Price ceilings andprice floors usually reduce the welfare of society because quantity demanded does not equal quantity supplied if the price control is binding.- Suppose that at the
equilibrium price of $50, theequilibrium quantity is 400 units andconsumer surplus is $8,000. If the equilibrium price falls to $40 and the equilibrium quantity increased to 450 units then consumer surplus increases by $4,500. - Assume there are only three sellers in a particular market. The cost of production for Alice is $95, for Ben it is $80 and for Carla it is $75. If the price in the market is $100 then
producer surplus in the market is $50. - The area below a demand curve and above the price measures consumer surplus.
- An announcement in the news about the positive effects of green tea consumption causes consumers to increase their purchases of green tea. As a result, the equilibrium market price of green tea increases and producer surplus increases.
- Because price reflects a consumer’s
willingness to pay , consumer surplus is the value of a good to a consumer. - If the existing market price is more than equilibrium, then total surplus would increase if the price decreased and moved to its
market equilibrium .
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