EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 11.6, Problem 4QQ
To determine
Difference between the equilibrium price and consumer-willing price.
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I think the answer to this question is B but I am not sure, I think it could also be C.
Consumer surplus in a market for a product would be equal to the area under the demand curve if A) producer surplus was equal to zero. B) marginal cost was equal to the market price. C) the product was produced in a perfectly competitive market. D) the market price was zero.
A subsidy is defined as
a payment that must be made to the government whenever a good
or service is sold.
the number of trades that are eliminated from a market when a tax
is imposed.
O the difference between total revenue and total cost for a business
firm.
a payment to either the buyer or seller of a good or service, usually
on a per-unit basis, when a good or service is purchased.
price
aggie to
d. How much output does each firm produce?
e. Calculate each firm's profit.
f.
Using market demand and supply functions (QD, QS):
i. Graphically represent the equilibrium in the market;
ii. Calculate producer surplus; and
iii.
Consumer surplus in this competitive equilibrium.
Chapter 11 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
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- Suppose a competitive market is comprised of firms that face identical cost curves. The firms experience an increase in demand that results in positive profits for the firms. Which of the following events are then most likely to occur? (i) New firms will enter the market. In the short run, price will rise; in the long run, price will rise further. In the long run, all firms will be producing at their efficient scale. a. (i), (ii) and (iii) b. (i) and (iii) only c. (i) and (ii) only d. (ii) and (iii) onlyarrow_forwardHow does underutilization of resources leads to Surplus? Why is it important to the organization to know about this?arrow_forwardThe area under the demand curve but above the equilibrium price is called: a) consumer surplus. b)producer surplus. c)accounting profit. d)economic profit.arrow_forward
- In the figure below, SS is the original supply curve of a firm. If an ad valorem subsidy is granted to producers of the product what will be the new supply curve? Pick a,b,c, or d a. S3 S3 b. S4 S4 c. S2 S2 d. S1 S1arrow_forwardWhen is the profit a firm earns equal to the producer surplus? Explainarrow_forwardWhat happens to the amount of consumer surplus and producer surplus when the supply of scarves suddenly declines (shifts left)? Group of answer choices Consumer surplus is unchanged and producer surplus is unchanged. Consumer surplus declines and producer surplus is unchanged. Producer surplus increases and consumer surplus increases. Producer surplus declines and consumer surplus is unchanged. Consumer surplus declines and producer surplus declines.arrow_forward
- Total producer surplus equals: -the area beneath the supply curve and above the demand curve. -the market price. -the area above the supply curve and beneath the market price. -the supply curve.arrow_forwardGiven that the demand function P = 240 - 5Q and the supply function P = 40 + 3Q Find:A. Market equilibrium price and quantityb. The size of the consumer surplusc. The amount of the producer surplus.arrow_forwardPrice and Costs MC Firm -+ LAVO I I Quantity If firms in the market are producing output but are currently making economic losses, in the market, and indicates the corresponding supply curve. The total quantity supplied to the market will decrease. Average total cost will decrease. The price of fertilizer will increase. Price The quantity supplied by each firm will decrease. Demand Marginal cost will decrease. Market I I Quantity S₂ Assuming there is no change in either demand or the firm's cost curves, which of the following statements is true about what will happen in the long run? Check all that apply. S (?) illustrates the present situation for the typical firmarrow_forward
- At Emily's bagel shop, the cost to make a homemade bagel is $3 per bagel. As a result of selling three bagels, Emily experienced a producer surplus of $19.50. Emily must be selling her bagels for 1. $6.50 each 2. $7.50 each 3. $9.50 each 4. $10.50 eacharrow_forwardFigure Producer Surplus Price is P1 B P2 D P3 F. Quantity Identify the area that represent the additional gain in producer surplus when the price rises from P, to Parrow_forward13. Firms in Competitive Markets The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. Which of the following statements is true about the price of fertilizer? Check all that apply. The price of fertilizer must be less than average total cost. Price and Costs The price of fertilizer must be less than marginal cost. The price of fertilizer must be equal to average variable cost. The following graphs show the cost curves faced by a typical firm, the demand for fertilizer, and possible price and supply curves. MC Firm ATC LAVC II II Quantity (? P P₂ Demand 1 Market Quantity S₁ S₂ (?)arrow_forward
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