Chapter 4, Problem 6P

To determine

(a) Calculation of consumer and producer surplus at the equilibrium in the market.
(b) Calculation of consumer and producer surplus after fourth edition of the book.

Concept Introduction:

Consumer surplus: The difference in amounts that the consumers are ready to pay for a particular good or service and the total amount they actually pay for that good or service is known as consumer surplus.

Producer surplus: Producer surplus is the difference between the amount a producer of a good receives and the lowest amount the producer is willing to accept for the good. Greater the difference between the two prices, greater benefit of the producer.

Equilibrium in market: The market is said to be in equilibrium when the quantity demanded matches quantity supplied.