b 1) d Price P₁ ( D Q₁ Q₂ Quantity 3) If actual production and consumption occur at Q1 and the price is P2 a) deadweight loss equals area f. b) consumer surplus equals area a + b. c) producer surplus equals area c. d) producer surplus equals area c + b. If actual production and consumption occur at Q2 a) there is deadweight loss of f. b) economic surplus is below the maximum. c) consumer surplus and producer surplus is maximized. d) there is deadweight loss of d. If actual production and consumption occur at Q1 and the price is P1 deadweight loss equals area b. a) b) consumer surplus equals area a. c) consumer surplus equals area a + b. d) producer surplus equals area c + b. R? deadweight loss equals area 2)

Economic surplus is maximized in a competitive market when       .   options:   The deadweight loss equals zero.   All the options are correct.   Quantity demanded is equal to quantity supplied.   Marginal benefit equals marginal cost.

1) Keep in mind that management needs to recognize the demand for their product. While this is an obvious statement, it cannot be over emphasized. For example, the inverse demand for Tires is: P= 81-250, The current market price is $20 and average income (I) is $10,990. (19 Points) a) Calculate the markets total Demand? (4 Points) b) Calculate the market's consumer surplus. (4 Points). Draw the Demand Curve and identify the price quantity and label the axes for price and quantity. c) Calculate the price elasticity of demand at the equilibrium output. (4 Points) d) Is the Price elasticity of demand calculated in Question #1c elastic or inelastic? (4 Points) e) Based on the income elasticity of demand, is this product a normal good or an inferior good? (3 Points)

110 The demand for a particular item is given by the function D(x) Find the consumer's surplus if the %3D x + 3 equilibrium price of a unit $5. The consumer's surplus is $