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Assume the market of digital clocks is perfectly competitive. (A) Show the market demand for and supply of clocks in a relevant diagram, Indicate the consumer surplus and producer surplus in this market.   (b) Suppose there is an improvement on technology that lowers the marginal cost of producing clocks. How would the technological improvement affect the price, quantity transacted, consumer surplus and producer surplus in the market? Depict your answer in part(a) diagram. (c) Now, the clocks turns into a monopoly market, what are the effects on the price, quantity transacted as well as economic welfare in this market? Depict your answer in a relevant diagram.(such as C.S. , P.S. , T.S. , and DWL)

Assume the market of digital clocks is perfectly competitive. (A) Show the market demand for and supply of clocks in a relevant diagram, Indicate the consumer surplus and producer surplus in this market.   (b) Suppose there is an improvement on technology that lowers the marginal cost of producing clocks. How would the technological improvement affect the price, quantity transacted, consumer surplus and producer surplus in the market? Depict your answer in part(a) diagram. (c) Now, the clocks turns into a monopoly market, what are the effects on the price, quantity transacted as well as economic welfare in this market? Depict your answer in a relevant diagram.(such as C.S. , P.S. , T.S. , and DWL)

Microeconomics: Principles & Policy
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis
Section: Chapter Questions
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Assume the market of digital clocks is perfectly competitive. (A) Show the market demand for and supply of clocks in a relevant diagram, Indicate the consumer surplus and producer surplus in this market.  
(b) Suppose there is an improvement on technology that lowers the marginal cost of producing clocks. How would the technological improvement affect the price, quantity transacted, consumer surplus and producer surplus in the market? Depict your answer in part(a) diagram.
(c) Now, the clocks turns into a monopoly market, what are the effects on the price, quantity transacted as well as economic welfare in this market? Depict your answer in a relevant diagram.(such as C.S. , P.S. , T.S. , and DWL)

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