Refer to the figure at right. The loss of consumer surplus equals $/0 A. area A + B + C. MC В. area A -В. P2 С. area A. A P1 D. area A + B. AR MR Quantity

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…

6. Consumer Surplus Valerie buys an iPhone for $240 and gets a consumer surplus of $160. Her willingness to pay for an iPhone is $ If she had bought the iPhone on sale for $180, her consumer surplus would have been $ If the price of the iPhone had been $450, her consumer surplus would have been $

Price $6 5 4 3 2 1 D 10 20 30 40 50 60 Quantity If the price of the good increases from $3 to $4, consumer surplus will decrease by: a. $15 b. $25 c. $20 d. $5 X e. $10

17. Suppose you can write generic supply and demand curves such that Qs = A + BP and Qp = D+CP, Equilibrium quantity is then given by 2. AC-BD b. AC-BD C-B c. C-B d. B

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2. Ben values each latte at $12 and purchases two for $3 each from the local cafe whose costs are $1 per latte. a. How much economic surplus is created as a result of this transaction? b. What's Ben's consumer surplus and what's the producer surplus gained by the cafe?