(a) The area of consumer surplus and producer surplus .

Question

In a supply-demand diagram: show how consumer surplus, producer surplus, and cost of production changes with no government regulation, after a price floor, and after a price ceiling. What consumer surplus is gained by consumers that is also producer surplus lost by producers? What consumer surplus is lost by consumers that is not gained by producers? What producer surplus is lost by producers that is not gained by consumers?

Answer 1

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 7, Problem 9P

To determine

(a)

The area of consumer surplus and producer surplus.

To determine

(b)

The area of consumer surplus and producer surplus if the $T tax is imposed.

To determine

(c)

The deadweight cost of the tax.

To determine

(d)

The tax revenue which is raised from the tax.

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In a supply-demand diagram: show how consumer surplus, producer surplus, and cost of production changes with no government regulation, after a price floor, and after a price ceiling. What consumer surplus is gained by consumers that is also producer surplus lost by producers? What consumer surplus is lost by consumers that is not gained by producers? What producer surplus is lost by producers that is not gained by consumers?

Suppose the vertical distance between points S and R represents a tax in the market. Please answer the questions under the case of the tax. What area is the tax revenue to the government? What is the amount of the tax revenue? What area is the consumer surplus represented by? What is the amount of consumer surplus? What area is the producer surplus represented by? What is the amount of producer surplus? What area is the deadweight loss represented by? What is the amount of deadweight loss? What is the buyers’ share of tax burden? What is the sellers’ share of tax burden?

Give typing answer with explanation and conclusion to all parts 1. Suppose that the demand curve for wheat is Q = 200 – 20p and the supply curve is Q = 20p. The government provides producers with a specific subsidy of s = $2 per unit. a. How do the equilibrium price and quantity change? b. What effect does the tax have on consumer surplus, producer surplus, government revenue, and deadweight loss.

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 7, Problem 9P

To determine

(a)

The area of consumer surplus and producer surplus.

To determine

(b)

The area of consumer surplus and producer surplus if the $T tax is imposed.

To determine

(c)

The deadweight cost of the tax.

To determine

(d)

The tax revenue which is raised from the tax.

Expert Solution & Answer

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Check out sample textbook 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 7, Problem 9P

To determine

(a)

The area of consumer surplus and producer surplus.

To determine

(b)

The area of consumer surplus and producer surplus if the $T tax is imposed.

To determine

(c)

The deadweight cost of the tax.

To determine

(d)

The tax revenue which is raised from the tax.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook 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 7, Problem 9P

To determine