Homework Help Question & Answers

Calculate consumer and producer surplus and total welfare using the following information and the formula for...


Calculate consumer and producer surplus and total welfare using the following information and the formula for the area of a t
Calculate consumer and producer surplus and total welfare using the following information and the formula for the area of a triangle. Equilibrium is achieved at a price of $18 and a quantity of 60. Consumers are willing to pay $40 for a quantity of zero. Producers are willing to produce a quantity of zero at a price of $8. Consumer surplus: Producer surplus: Total welfare:
0 0
Next > < Previous
ReportAnswer #1

Equilibrium price, P = $18
Equilibrium quantity, Q = 60
Price consumers are willing to pay for a quantity of zero, Pb = $40
Price producers are willing to accept for a quantity of zero, Ps = $8

Consumer surplus = area below downward sloping curve and above P = area of triangle = (1/2)*base*height
So, Consumer surplus = (1/2)*(Q)*(Pb - P) = (1/2)*(60)*(40 - 18) = 30*(22) = $660

Producer surplus = area above positively sloping curve and below P = area of triangle = (1/2)*base*height
So, Producer surplus = (1/2)*(Q)*(P - Ps) = (1/2)*(60)*(18 - 8) = 30*(10) = $300

Total welfare = Consumer surplus + Producer surplus = 660 + 300 = $960

Know the answer?
Add Answer of:
Calculate consumer and producer surplus and total welfare using the following information and the formula for...
Your Answer: Your Name: What's your source?
Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Name 1. Find the equilibrium, price and quantity, Label consumer surplus, and producer surplus in the...

    Name 1. Find the equilibrium, price and quantity, Label consumer surplus, and producer surplus in the graph. Calculate the area of consumer surplus, and producer surplus. $60 $40 $20 20 40 60 Q

  • producer surplus and consumer surplus

    At the market price in part a, the net gain to consumers(i.e., consumer surplus) when 2,000 units are purchased is $__________.At the market price in part a, the net gain to producers(i.e., the producer surplus) when they supply 2,000 units is $_________.How did my teacher get the consumer surplus(answer=40,000)and producer(22,500) when the equilibrium is <20,4,000>????????????

  • Which of the following best defines producer surplus? O The difference between the price that suppliers...

    Which of the following best defines producer surplus? O The difference between the price that suppliers actually O A situation in which all of the potential gains from trade have been realized. O The difference between the price that suppliers actually receive and the minimum price they would be willing to accept. receive and the maximum price they would be willing to accept. O The difference between the maximum price consumers are willing to pay and the price they actually...

  • Consumer and Producer Surplus

    The quantity demanded x (in units of a hundred) of the Mikado miniature cameras per week is related to the unit price p (in dollars) byp = -0.2x^2 + 80and the quantity x (in units of a hundred) that the supplier is willing to make available in the market is related to the unit price p (in dollars) byp = 0.1x^2 + x + 40.If the market price is set at the equilibrium price, find the consumers' surplus and the...

  • Partial Equilibrium and Consumer/Producer Surplus

    Suppose that the (aggregate) demand curve for wheat is Qd(p)= Dx(p)= max{0,100−10p}, and that the (aggregate) supply curve isQs(p)=Sx(p)=10pCompute the partial equilibrium, and the consumer and producer surplus in equilibrium. Illustrate the demand and supply curves, the partial equilibrium and theconsumer and producer surplus.The government now imposes a tax of τ = $1 per unit. Compute the new equilibrium quantity and the equilibrium prices for consumers and producers. Also compute thetax revenue, deadweight loss, and the new consumer and producer...

  • I am trying to calculate the reduction in consumer surplus and producer surplus caused by the tax in this graph

    I am trying to calculate the reduction in consumer surplus and producer surpluscaused by the tax in this graph.The price with the tax is $12. The buyers pay $16. Sellers receive $8. The quantity has decreased from 25 to 15.The answers provided for the reduction of consumer and producer surplus are $100,$80,$70, $60 for each.I am getting $60 for each reduction in consumer and producer surplus and it does not seem right to me.Price $22_________________20_________________18_________________16__________________________{___|_____|12_______{TAX|_____|_________{___|_____|8____________|_____|6____________|_____|4____________|_____|2____________|_____|______5__10__15_20_25_30_Quantity

  • consumer surplus and producer surplus

    The quantity demanded x (in units of a hundred) of the Mikado miniature cameras per week is related to the unit price p (in dollars) byp = -0.2x2 + 220and the quantity x (in units of a hundred) that the supplier is willing to make available in the market is related to the unit price p (in dollars) byp = 0.1x2 + 8x + 110.If the market price is set at the equilibrium price, find the consumers' surplus and the...

  • 11. Total welfare The following graph shows supply and demand in the market for smartphones Use...

    11. Total welfare The following graph shows supply and demand in the market for smartphones Use the black point (cross symbol) to indicate the equilibrium price and quantity of smartphones. Then use the green point (triangle symbol) to fill the area representing consumer surplus, and use the purple point (diamond symbol) to fill the area representing producer surplus 250 Demand 225 Equilbrium 200 175 Consumer Surplus 150 125 Producer Surplus 100 75 50 25 Supply 0 280 350 175 210...

  • 3. Consumer Surplus and Producer Surplus from Market Exchange Consider the Zambian market for ora...

    3. Consumer Surplus and Producer Surplus from Market Exchange Consider the Zambian market for oranges. The following graph shows the domestic demand and domestic supply curves for oranges in Zambia. Suppose Zambia's government currently does not allow the international trade in oranges. Use the black point (plus symbol) to indicate the equilibrium price of a ton of oranges and the equilibrium quantity of oranges in Zambia in the absence of international trade. Then, use the green point (triangle symbol) to...

  • Microeconomics ***Please Answer Carefully*** 5. Total economic surplus The following diagram shows supply and demand in...

    Microeconomics ***Please Answer Carefully*** 5. Total economic surplus The following diagram shows supply and demand in the market for tablets. Use the black point (plus symbol) to indicate the equilibrium price and quantity of tablets. Then use the green point (triangle symbol) to fill the area representing consumer surplus, and use the purple point (diamond symbol) to fill the area representing producer surplus. 100 T Demand 90 Equilibrium 80 70 60 Consumer Surplus 50 40 Producer Surplus 30 Supply 20...

Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.