Draw a supply and demand graph and identify the areas of consumer surplus and producer surplus. Given the demand curve, what impact will an increase in supply have on the amount of consumer surplus shown in your diagram? Explain why.
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- Consumer surplus is a measure of the difference between: a) The price which a consumer has to pay and the cost of producing the good (in a diagram, the area between the market price, and the supply curve). b) The consumer’s willingness to pay, and the cost of production (the area between the demand curve and the supply curve). c) The value which a consumer places on a unit of the good, and the market price (the area between the demand curve and the market price line). d) The marginal revenue from sales and the marginal cost of sales (the area between the marginal revenue and the marginal cost curves).Which of the following is not a true statement about producer surplus? Select the correct answer below: Producer surplus is the benefit producers receive for selling goods in a market. On a graph, producer surplus is the area between the market price and the segment of the supply curve below the equilibrium. Producer surplus is the same as consumer surplus. Producer surplus is the difference between the amount that suppliers in the market are willing to supply goods for and the amount they actually receive for those goods.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? 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?
- Suppose a consumer is willing to buy a book for $50, but the actual price of the book in the market is $30. What is the consumer surplus in this case? If the price of the book increases to $40, what would be the new consumer surplus?What is a producer surplus? Describe how it is illustrated on a supply and demand diagram?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?
- What is producer surplus? How is it illustrated on a demand and supply diagram? Give an example of producer surplus.Consider the market for some product X that is represented in the accompanying demand-and-supply diagram. a. Calculate the total economic surplus in this market at the free-market equilibrium price and quantity. The total economic surplus is $ per day. (Round your response to the nearest cent as needed.) b. Calculate the total economic surplus in this market when a price ceiling at $14 is in effect. The total economic surplus is $ per day. (Round your response to the nearest cent as needed.) c. After imposition of the price ceiling at $14, how many units of this good are no longer being produced and consumed per day compared to the free-market equilibrium? unit(s) of this good are no longer being produced and consumed per day compared to the free-market equilibrium. (Round your response to the nearest whole number as needed.) d. Calculate the deadweight loss that results from the imposition of the price ceiling at $14. Price ($) 38.00 34.00- 30.00- 26.00+ 22.00- 18.00- 14.00- 10.00-…Consider the market for mountain bikes. The following graph shows the demand and supply for mountain bikes before the government imposes any taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of mountain bikes in the absence of a tax. Then use the green point (triangle symbol) to shade the area representing total consumer surplus (CS) at the equilibrium price. Next, use the purple point (diamond symbol) to shade the area representing total producer surplus (PS) at the equilibrium price. (screen shot 1) Suppose the government imposes an excise tax on mountain bikes. The black line on the following graph shows the tax wedge created by a tax of $80 per bike. First, use the tan quadrilateral (dash symbols) to shade the area representing tax revenue. Next, use the green point (triangle symbol) to shade the area representing total consumer surplus after the tax. Then, use the purple point (diamond symbol) to shade the area…
- Consider the market for some product X that is represented in the accompanying demand-and-supply diagram. a. Calculate the total economic surplus in this market at the free-market equilibrium price and quantity. The total economic surplus is $280 per day. (Round your response to the nearest cent as needed.) b. Calculate the total economic surplus in this market when a price ceiling at $21 is in effect. The total economic surplus is $ per day. (Round your response to the nearest cent as needed.) c. After imposition of the price ceiling at $21, how many units of this good are no longer being produced and consumed per day compared to the free-market equilibrium? unit(s) of this good are no longer being produced and consumed per day compared to the free-market equilibrium. (Round your response to the nearest whole number as needed.) d. Calculate the deadweight loss that results from the imposition of the price ceiling at $21. per day. The deadweight loss that results from the imposition of…What areas of the diagram above represent consumer surplus if the government does not impose any price controls? Select all that applyConsider the market for designer handbags. The following graph shows the demand and supply for designer handbags before the government imposes any taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of designer handbags in the absence of a tax. Then use the green point (triangle symbol) to shade the area representing total consumer surplus (CS) at the equilibrium price. Next, use the purple point (diamond symbol) to shade the area representing total producer surplus (PS) at the equilibrium price. PRICE (Dollars per handbag) 100 90 80 70 60 50 40 30 20 10 0 0 Demand Supply Before Tax 160 3:20 480 640 800 960 1120 1280 1440 1600 QUANTITY (Handbags) + Equilibrium Consumer Surplus Producer Surplus