LSC CUMBERLAND EC202 MICRO>PKG<
21st Edition
ISBN: 9781260586992
Author: McConnell
Publisher: MCG
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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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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.
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.
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
LSC CUMBERLAND EC202 MICRO>PKG<
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- The 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_forwarda. A firm faces the following average revenue (demand) curve:P = 120 − 0.02Qwhere Q is weekly production and P is price, measured in cents per unit. The firm’s cost function is given by C = 60Q + 25,000. Assume that the firm maximizes profits. i. What is the level of production, price, and total profit per week?ii. If the government decides to levy a tax of 14 cents per unit on this product, what will be the new level of production, price, and profit?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
- The city government is considering two tax proposals: • A lump-sum tax of $300 on each producer of hamburgers. • A tax of $1 per burger, paid by producers of hamburgers. Which of the following statements is true as a result of the lump-sum tax? Check all that apply. оооо Marginal cost will decrease. Average total cost will remain unchanged. Average fixed cost will increase. Average variable cost will remain unchanged.arrow_forwardAt 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_forwardProducer surplus is defined as The area above MC and above the price of output The area below the market price of output and above supply The area above AVC and below ATC The area below supply and above the price of outputarrow_forward
- 13. 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_forwardGiven: A. Daily demand curve for potato is Demand: Q = 1500 − 15P B. Long-run supply curve for potato is Q = 12P − 120 Note: QD demand in kilos per day and P is price per kilos. Question: 1. What is the long-run equilibrium Price and Quantity?2. Based on your answers in (1), what is consumer surplus at this equilibrium? What is producer surplus at this equilibrium?arrow_forwardSuppose the celery industry is competitive. The (inverse) market demand schedule is: p= 1000.1QD The (inverse) market supply schedule is: Find the following in equilibrium. a. Competitive market output level = b. Competitive market price = $ c. Consumer surplus = $ d. Producer surplus = $ MC = 4+0.2Qs unitsarrow_forward
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