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.

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

ENGR.ECONOMIC ANALYSIS

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Author:NEWNAN

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Chapter1: Making Economics Decisions

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4. Consider two markets for the same good: markets 1 and 2. The demand for the good on these markets are: P₁ = 20 2Q₁ and P2 = 40-2Q2 The total cost of producing any output Q is c(Q) = 10 + 8Q where Q = 9₁ +92. (a) Suppose these two markets are completely separated but each is served by a per- fectly competitive industry. What will be the prices and outputs supplied to cach of the two markets?
The Covid-19 is a highly contagious disease. Although there are vaccines for Covid-19, the vaccination is not free and there are side effects of the vaccine, making it less suitable especially for senior citizens. The government encourages people to go for vaccination against Covid-19 but make it optional. Discusswith a suitable market diagram whether the vaccination market is efficient. Will the vaccination market be efficient if the government makes it compulsory for all people to take the vaccine? Explain with a suitable diagram.
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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?