2. Assume the equilibrium quantity in a competitive market is 6 and the equilibrium price is 16. toAlso assume the highest willingness to pay is 40 and the lowest cost is 4. Calculate the consumersurplus, producer surplus, and total surplus for this market. (S)-16 =24(ps) 16.24 + 12 = 40 - 16+16 -4 = 40-4 =4 = 123. Describe what is meant by a market outcome being "efficient". The total Surplus is 3-what a marketoutcome means by being efficient -all information is complete and no cost.4. Consider the market for corn described in the graphical model below:iswhenP10971349SP floorDQ3 4411077a) Calculate the consumer surplus, producer surplus, and total surplus when no pricerestrictions are in place.b) Calculate the consumer surplus, producer surplus, and total surplus with the price floor inplace.c) Explain if the market more efficient or less efficient with the price floor?d) What is a deadweight loss? Is there a deadweight loss in the corn market without theprice floor? If yes, calculate it.e) Is there a deadweight loss in the corn market with the price floor? If yes, calculate it.

2. Assume the equilibrium quantity in a competitive market is 6 and the equilibrium price is 16.0 Also assume the highest willingness to pay is 40 and the lowest cost is 4. Calculate the consumer surplus, producer surplus, and total surplus for this market. (CS)40 (0) 16 16 - = 24 12

2. Assume the equilibrium quantity in a competitive market is 6 and the equilibrium price is 16.0 Also assume the highest willingness to pay is 40 and the lowest cost is 4. Calculate the consumer surplus, producer surplus, and total surplus for this market. (CS)40 (0) 16 16 - = 24 12

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Consumers, Producers, And The Efficiency Of Markets

Section: Chapter Questions

Problem 5CQQ

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Question

2. Assume the equilibrium quantity in a competitive market is 6 and the equilibrium price is 16. to
Also assume the highest willingness to pay is 40 and the lowest cost is 4. Calculate the consumer
surplus, producer surplus, and total surplus for this market. (S)-16 =24
(ps) 16.
24 + 12 = 40 - 16+16 -4 = 40-4 =
4 = 12
3. Describe what is meant by a market outcome being "efficient". The total Surplus is 3-
what a market
outcome means by being efficient -
all information is complete and no cost.
4. Consider the market for corn described in the graphical model below:
is
when
P
10
9
7
1
3
4
9
S
P floor
D
Q
3 44
1
1077
a) Calculate the consumer surplus, producer surplus, and total surplus when no price
restrictions are in place.
b) Calculate the consumer surplus, producer surplus, and total surplus with the price floor in
place.
c) Explain if the market more efficient or less efficient with the price floor?
d) What is a deadweight loss? Is there a deadweight loss in the corn market without the
price floor? If yes, calculate it.
e) Is there a deadweight loss in the corn market with the price floor? If yes, calculate it.

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