The economic surplus above and below equilibrium.

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Answer 1

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Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 4, Problem 4.2.10PA

To determine

The economic surplus above and below equilibrium.

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Why can total surplus never fall below zero in a market for goods and services?

I don't understand the meaning of this sentence. This is the concept that experts say when answering questions. Could you explain that? Why is consumer surplus equal to the utility obtained in consumption? Utility refers to the total amount of satisfaction that derived from the consumption of goods and services. The person's consumer surplus in this case is equal to the utility he derived from the consumption.

Suppose that the government imposes a per-unit tax on cell phones. The tax is imposed on producers of cell phones and the amount of the tax is $50 per cell phone. The following graph shows the effect of the tax. Use the graph to answer the following questions. a) What is the equilibrium P* and Q* before the imposition of the tax? b) How many cell phones per year are sold after the tax has been imposed? What price per cell phone do consumers pay after the tax has been imposed? c) What price do producers receive per cell phone after the tax is paid?

Answer 2

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 4, Problem 4.2.10PA

To determine

The economic surplus above and below equilibrium.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 4, Problem 4.2.10PA

To determine

The economic surplus above and below equilibrium.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 4, Problem 4.2.10PA

To determine