ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Zone 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, according to these two sets of ideas? When the consumers' utility goes beyond, goes below) the price paid, consumer surplus is generated. 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 maximum potential 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 additional resources in other pursuits more than it values them in consumption of that good.arrow_forwardWhy can total surplus never fall below zero in a market for goods and services?arrow_forwardusing the graph answer the following questions 8-9 listed on image 10. what is the size of social (total) surplusarrow_forward
- Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither. Statement Consumer Surplus Producer Surplus Neither I sold a used laptop for $140 on eBay last week. This week, someone offered me $30 for it. Even though I was willing to pay up to $47 for a used textbook, I bought a used textbook for only $42. I sold a jersey sweater for $35, even though I was willing to go as low as $25 in order to sell it.arrow_forwardIn a market, the consumer surplus is 800,000 units and the producer surplus is 100,000. Which of the following statement is true? Group of answer choices The market is efficient since marginal benefit is equal to marginal cost. The market is inefficient since consumer surplus is greater than producer surplus and marginal benefit is equal to marginal cost. The market is efficient since consumer gain more than the producer. The market is inefficient since consumer surplus is greater than producer surplus.arrow_forwarddo fast i will 10 upvotes.arrow_forward
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