The consumer surplus and producer surplus .

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Answer 1

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Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 4, Problem 4.1.9PA

Sub part (a):

To determine

The consumer surplus and producer surplus.

Sub part (b):

To determine

Impact of lowering the production cost.

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Briefly explain whether you agree with the following statement: "If consumer surplus LOADING... in a market increases, producer surplus LOADING... must decrease." A. The statement is incorrect. Consumer surplus (and producer surplus) could increase if the government intervenes in a market by imposing a price floor. B. The statement is incorrect. Consumer surplus (and producer surplus) could increase by decreasing deadweight loss. C. The statement is incorrect. Consumer surplus (and producer surplus) could increase by decreasing economic surplus. D. The statement is incorrect. Consumer surplus (and producer surplus) could increase by decreasing economic efficiency. E. The statement is correct.

(d) Draw a diagram that shows consumer surplus and producer surplus at the market equilibrium. Briefly explain what is meant by consumer surplus and producer surplus.

Use the following graph to answer the question: how much is producer surplus? What is the total value to consumers of consuming the first ten units of this good?

Answer 2

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 4, Problem 4.1.9PA

Sub part (a):

To determine

The consumer surplus and producer surplus.

Sub part (b):

To determine

Impact of lowering the production cost.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 4, Problem 4.1.9PA

Sub part (a):

To determine

The consumer surplus and producer surplus.

Sub part (b):

To determine

Impact of lowering the production cost.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 4, Problem 4.1.9PA

Sub part (a):

To determine