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ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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![Expert Answer
Step 1
Note: We'll answer the first question since the exact one wasn't specified. Please submit
a new question specifying the one you'd like answered.
1) The welfare of a consumer is determined by the consumer surplus which is the difference
between the amount of money a consumer is willing to pay for a goods and the amount they
actually pay.
Step 2
Consumer surplus (CS) is obtained by subtracting the amount of money that a customer is
willing to pay for a commodity and amount of money that they actually pay. It is the area
above the equilibrium price and under the demand curve.
The consumer surplus can be computed as:
Consumer surplus = Willingness to pay - Price paid
Suppose John is willing to pay $90 for a book but the price of book is $80, so the consumer
surplus of John will be $10($90-$80).](https://content.bartleby.com/qna-images/question/c3e671be-5699-41c7-ad14-09ef8165fba8/2184c60a-4871-4e92-b761-dedc3878296b/ukz4mzm_thumbnail.png)
Transcribed Image Text:Expert Answer
Step 1
Note: We'll answer the first question since the exact one wasn't specified. Please submit
a new question specifying the one you'd like answered.
1) The welfare of a consumer is determined by the consumer surplus which is the difference
between the amount of money a consumer is willing to pay for a goods and the amount they
actually pay.
Step 2
Consumer surplus (CS) is obtained by subtracting the amount of money that a customer is
willing to pay for a commodity and amount of money that they actually pay. It is the area
above the equilibrium price and under the demand curve.
The consumer surplus can be computed as:
Consumer surplus = Willingness to pay - Price paid
Suppose John is willing to pay $90 for a book but the price of book is $80, so the consumer
surplus of John will be $10($90-$80).
![Answer the following questions in your own words. Start a new thread while replying.
1. What is consumer surplus? How do we calculate it? Provide one real-world example
to explain.
2. What is producer surplus? How do we calculate it? Provide one real-world example
to explain.
3. Refer to the graph below:
Prio
90
Suply
30
30
20
10
Dend
10
20
Based on the graph information calculate:
a. Consumer surplus, producer surplus, and total surplus at equilibrium.
b. Calculate the consumer surplus when the price is $60 per unit.
C. Analyze what happened to consumer surplus when the price increased from $40
per unit to $60 per unit. (for example, explain loss to the existing buyers and loss to
the buyers who left the market).](https://content.bartleby.com/qna-images/question/c3e671be-5699-41c7-ad14-09ef8165fba8/2184c60a-4871-4e92-b761-dedc3878296b/bk2szjh_thumbnail.png)
Transcribed Image Text:Answer the following questions in your own words. Start a new thread while replying.
1. What is consumer surplus? How do we calculate it? Provide one real-world example
to explain.
2. What is producer surplus? How do we calculate it? Provide one real-world example
to explain.
3. Refer to the graph below:
Prio
90
Suply
30
30
20
10
Dend
10
20
Based on the graph information calculate:
a. Consumer surplus, producer surplus, and total surplus at equilibrium.
b. Calculate the consumer surplus when the price is $60 per unit.
C. Analyze what happened to consumer surplus when the price increased from $40
per unit to $60 per unit. (for example, explain loss to the existing buyers and loss to
the buyers who left the market).
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