3. (1 pt). Use the ideas of consumer surplus and producer surplus to explain why economists saycompetitive markets are efficient. Why are below- or above-equilibrium levels of outputinefficient, according to these two sets of ideas?When the consumers' utility goes beyond, goes below) the price paid, consumer surplus isgenerated. Likewise, when producers receive a price (greater, smaller ) than marginal cost,producer surplus is created. By producing up to the point where MB = MC, the maximumpotential consumer surplus (CS) and producer surplus (PS) is generated. Producing (more. less )than the equilibrium level means that potential surplus is left unrealized (underproduction).Overproduction subtracts from the surplus because society values the use of the additionalresources in other pursuits more than it values them in consumption of that good.

Answered: Image /qna-images/answer/1e938f74-8110-47dc-9548-450d9244c7d9.jpg

Answered: 3. C1 pt). Use the ideas of consumer…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

a) Let us assume an economy of 3 firms A, B and C whose supply of a commodity at different prices is depicted in the following table. Draw the supply curve of each individual and the market supply. Take a picture of your diagrams and upload with your answer. B's supply Price A's supply C's supply Market supply 1 4 2 6. 3 8 10 346 2345
3. Recently, the Obama administration proposed a $1.00 per unit (pack) excise tax on cigarettes (which would be imposed legally or statutorily on cigarettes sellers). Some news reports have suggested that the proposed tax would increase cigarettes prices by $1.00 per pack and be paid by smokers (cigarette buyers). Using (separate) competitive supply and demand diagrams of the cigarettes market carefully show and explain TWO extreme demand and supply conditions under which these news reports would be true?
14. Suppose a market is currently producing in an allocatively efficient manner. Using the concepts of marginal utility, marginal cost, and price, explain exactly what that market must be doing and why that makes the outcome allocatively efficient or not.
12:30 .l market analysis using d. classroom.google.com Open with Google Docs v nics PA PL Explain each graph using demand and supply analysis. Your work Assigned + Add or create Page 1 | 1 ... ...
Provide a definition of each of the following, and the required example, explanation, or graph. A Production Possibility Curve, a definition and a graph showingan increasing opportunity cost of producing Product A as a company produces more of Product B. Changes in quantity demanded vs. changes in market demand (the definition of each and a single graph showing each change). A shift in the market supply curve (definition and graph).
1. What are the conditions for an efficient market? Discuss if are they met in the reality.
This question is inspired on the recent evolution of electricity markets in Switzerland and the EU.Suppose a market consists of three producers:i. Firm 1 (photovoltaics) has a marginal cost of production od CHF 1 and can produce up to 100 MW/h;ii. Firm 2 (hydroelectric) has a marginal cost od production of CHF 5 and can produce up to 200 MW/H;iii. Firm 3 (gas) has a marginal cost od production of CHF 20 and can produce up to 200 MW/h.For simplicity, assume that there are no fixed costs of production.Consumers are willing to pay a constant amount of 25 CHF for each additional MW/h up to 500 MW/h. a) Draw a graph of supply and demand for this market.b) Calculate the price in the market and the profits of each company.
Using your knowledge from Topics 1-7, which of the following statements about Pareto optimal outcomes is false? Every outcome which is Pareto optimal must be a Pareto improvement over all other outcomes. An outcome which maximises total surplus is always Pareto optimal. Pareto optimal outcomes can be ordered in terms of total surplus. An equilibrium in a competitive market is an outcome which is Pareto optimal. O None of the above. No answer.
8. Consumer and Producer Surplus Suppose Charles is the only seller in the market for bottled water and Yakov is the only buyer. The following lists show the value Yakov places on a bottle of water and the cost Charles incurs to produce each bottle of water: Yakov's Value Value of first bottle: $7 Value of second bottle: $5 Value of third bottle: $3 Value of fourth bottle: $1 Charles's Costs Cost of first bottle: $1 Cost of second bottle: $3 Cost of third bottle: $5 Cost of fourth bottle: $7 The following table shows their respective supply and demand schedules: Price Quantity Demanded Quantity Supplied $1 or less 4 о $1 to $3 3 1 $3 to $5 2 2 $5 to $7 1 3 More than $7 0 4 Use Charles's supply schedule and Yakov's demand schedule to find the quantity supplied and quantity demanded at prices of $2, $4, and $6. Enter these values in the following table. Price Quantity Demanded Quantity Supplied 2 4 A price of brings supply and demand into equilibrium. At the equilibrium price, consumer…
4. Suppose that a market with an inelastic demand curve experiences an upward shift (to the left) in the supply curve. Using comparative statics, analyze how the equilibrium price and equilibrium quantity in this market will change as a result of this shift in the supply curve. What is the magnitude of the change in the equilibrium price and equilibrium quantity? Be sure to illustrate your answer with graph.
DROP OFF BU rEDAY @UPM 27 9. DEADWEIGHT LOSS WITH PRICE CONTROLS If an equilibrium position is less than perfectly efficient, the loss in total surplus (CS + PS) is termed "deadweight loss." If D and S are linear, then DWL is measured as the area a triangle, the "loss triangle." The area of a triangle is half of (base X height). > Suppose that demand and supply equations in a competitive market are: Demand: P = 30 – 0.6Q Supply: P = 6 + 0.4Q a. Compute the market equilibrium. (Q*, P*) = ( b. Calculate consumer surplus and producer surplus at the market equilibrium. Producer surplus (PS) is the area above the supply curve and below the price. CS* = PS* = C. Suppose that a price floor of Pr = 24 is imposed by the government. Find the equilibrium quantity with the price floor. Then calculate consumer surplus, producer surplus, and deadweight loss at the regulated equilibrium. CSt = PS = DWL =
market Describe the main characteristics of the types given below. Describethe main characteristics of the supply side and the demand side of the markets. How do sellers interact with each other in the markets? i)Perfectly competitive market

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS

3. C1 pt). Use the ideas of consumer surplus and producer surplus to explain why economists say competitive markets are efficient. Why are below- or above-equilibrium levels of output inefficient, ccording to these two sets of ideas?