The consumer surplus , total surplus and deadweight loss .

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 4, Problem 4P

Subpart (a):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart (a):

Expert Solution

Explanation of Solution

Figure -1 illustrates the market equilibrium that is arrived at equilibrium between the demand and supply curve.

Economics (Irwin Economics), Chapter 4, Problem 4P

In figure -1 panel (a) and (b), the horizontal axis measures the quantity of bags and the vertical axis measures the price per bag. The curve ‘S’ represents the supply and the curve ‘D’ represents the demand.

The inverse demand function can be derived as follows:

Price=PriceAt point 'a'+Equilibrium price−PriceAt point 'a'Q1−QuantityAt point 'a'(Quantity)=85+45−8520−0(Quantity)=85−2(Quantity)

The inverse demand functions of price=85−2(Quantity) .

The inverse supply curve can be calculated as follows:

Price=PriceAt point 'c'+Equilibrium price−PriceAt point 'c'Q1−QuantityAt point 'c'(Quantity)=5+45−520−0(Quantity)=5+2(Quantity)

The inverse supply functions of price=5+2(Quantity) .

The inverse demand function and supply functions reveal that the producer willing price is $5 and the consumer willing price is $85. The equilibrium price is $45. The total surplus can be calculated as follows:

Total surplus=12(Consumer willing price−Producer willing price)×Equilibrium quantity=12(85−5)×20=(80)×10=800

The total surplus is $800.

The consumer surplus can be calculated as follows:

Consumer surplus=12(Consumer willing price−Equilibrium price)×Equilibrium quantity=12(85−45)×20=(40)×10=400

The consumer surplus is $400.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Subpart (b):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart (b):

Expert Solution

Explanation of Solution

The consumer willing price at Q2 level of output (15 units) can be calculated by substituting the Q2 level of output to the inverse demand function.

Price=85−2(15)=85−30=55

The consumer new willing price is $55.

The producer willing price at Q2 level of output (15 units) can be calculated by substituting the Q2 level of output into the inverse supply function.

Price=5+2(15)=5+30=35

The producer’s new willing price is $35.

The deadweight loss can be calculated as follows:

Deadweight loss=12(Consumer new willing price−Producer new wlling price)×(Equilibrium quantity−New quantity)=12(55−35)×(20−15)=12(20)×(5)=50

The deadweight loss is $50.

The total surplus can be calculated as follows:

Total surplus=Initial total surplus−Deadweight loss=800−50=750

The total surplus is $750.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Subpart c):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart c):

Expert Solution

Explanation of Solution

The consumer willing price at Q3 level of output (27 units) can be calculated by substituting the Q3 level of output to the inverse demand function.

Price=85−2(27)=85−54=31

The consumer new willing price is $31.

The producer willing price at Q3 level of output (127 units) can be calculated by substituting the Q3 level of output to the inverse supply function.

Price=5+2(27)=5+54=59

The producer new willing price is $59.

The deadweight loss can be calculated as follows:

Deadweight loss=12(Consumer new willing price−Producer new wlling price)×(Equilibrium quantity−New quantity)=12(31−59)×(20−27)=12(−28)×(−7)=98

The deadweight loss is $98.

The total surplus can be calculated as follows:

Total surplus=Initial total surplus−Deadweight loss=800−98=702

The total surplus is $702.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

A stadium can seat 60,000 people. Assume 35% of seats are not occupied (not for sale) because of Covid-19 and social distancing requirements. You are told that the current price of tickets is $70 and that the demand is linear and that the demand function (Qd) = 60,000 - 250P. examine the market for tickets for games at the stadium during these Covid times. You should Illustrate themarket for tickets using a demand and supply diagram. Show all your calculations and properly label the diagram. At $70 a ticket the cap on the number of seats available (because of Covid restrictions) is creating a shortage. How many people miss out on tickets when they are priced at $70 per ticket?

Assume the following values for attached figures: Q1 = 20 bags. Q2 = 15 bags. Q3 = 27 bags. The market equilibrium price is $45 per bag. The price at a is $85 per bag. The price at c is $5 per bag. The price at f is $59 per bag. The price at g is $31 per bag. Apply the formula for the area of a triangle (Area = ½ × Base × Height) to answer the following questions. LO4.2 a. What is the dollar value of the total surplus (producer surplus plus consumer surplus) when the allocatively efficient output level is being produced? How large is the dollar value of the consumer surplus at that output level? b. What is the dollar value of the deadweight loss when output level Q2 is being produced? What is the total surplus when output level Q2 is being produced? c. What is the dollar value of the deadweight loss when output level Q3 is produced? What is the dollar value of the total surplus when output level Q3 is produced?

For all questions, refer to the graph on the reverse side. Use this graph for 1 – 4. The graph represents the market for coffee. Estimation may be necessary, so show work. Name a good that will see increased sales due to the tariff or quota above. Name a good besides coffee that will see decreased sales due to the tariff or quota above. Suppose that 1 US$ = 1.5 South African Rand. Also, suppose that the representative good, peanut butter, is $3 per jar in the US and 4 Rand per jar in SA. How will this situation affect the exchange market for U.S. dollars? Explain/show the effect(s) of these prices. Include the initial effect(s), the market adjustment(s), and the final result(s) on equilibrium.

Answer 2

Question

Chapter 4, Problem 4P

Subpart (a):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart (a):

Expert Solution

Explanation of Solution

Figure -1 illustrates the market equilibrium that is arrived at equilibrium between the demand and supply curve.

Economics (Irwin Economics), Chapter 4, Problem 4P

In figure -1 panel (a) and (b), the horizontal axis measures the quantity of bags and the vertical axis measures the price per bag. The curve ‘S’ represents the supply and the curve ‘D’ represents the demand.

The inverse demand function can be derived as follows:

Price=PriceAt point 'a'+Equilibrium price−PriceAt point 'a'Q1−QuantityAt point 'a'(Quantity)=85+45−8520−0(Quantity)=85−2(Quantity)

The inverse demand functions of price=85−2(Quantity) .

The inverse supply curve can be calculated as follows:

Price=PriceAt point 'c'+Equilibrium price−PriceAt point 'c'Q1−QuantityAt point 'c'(Quantity)=5+45−520−0(Quantity)=5+2(Quantity)

The inverse supply functions of price=5+2(Quantity) .

The inverse demand function and supply functions reveal that the producer willing price is $5 and the consumer willing price is $85. The equilibrium price is $45. The total surplus can be calculated as follows:

Total surplus=12(Consumer willing price−Producer willing price)×Equilibrium quantity=12(85−5)×20=(80)×10=800

The total surplus is $800.

The consumer surplus can be calculated as follows:

Consumer surplus=12(Consumer willing price−Equilibrium price)×Equilibrium quantity=12(85−45)×20=(40)×10=400

The consumer surplus is $400.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Subpart (b):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart (b):

Expert Solution

Explanation of Solution

The consumer willing price at Q2 level of output (15 units) can be calculated by substituting the Q2 level of output to the inverse demand function.

Price=85−2(15)=85−30=55

The consumer new willing price is $55.

The producer willing price at Q2 level of output (15 units) can be calculated by substituting the Q2 level of output into the inverse supply function.

Price=5+2(15)=5+30=35

The producer’s new willing price is $35.

The deadweight loss can be calculated as follows:

Deadweight loss=12(Consumer new willing price−Producer new wlling price)×(Equilibrium quantity−New quantity)=12(55−35)×(20−15)=12(20)×(5)=50

The deadweight loss is $50.

The total surplus can be calculated as follows:

Total surplus=Initial total surplus−Deadweight loss=800−50=750

The total surplus is $750.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Subpart c):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart c):

Expert Solution

Explanation of Solution

The consumer willing price at Q3 level of output (27 units) can be calculated by substituting the Q3 level of output to the inverse demand function.

Price=85−2(27)=85−54=31

The consumer new willing price is $31.

The producer willing price at Q3 level of output (127 units) can be calculated by substituting the Q3 level of output to the inverse supply function.

Price=5+2(27)=5+54=59

The producer new willing price is $59.

The deadweight loss can be calculated as follows:

Deadweight loss=12(Consumer new willing price−Producer new wlling price)×(Equilibrium quantity−New quantity)=12(31−59)×(20−27)=12(−28)×(−7)=98

The deadweight loss is $98.

The total surplus can be calculated as follows:

Total surplus=Initial total surplus−Deadweight loss=800−98=702

The total surplus is $702.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 4, Problem 4P

Subpart (a):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart (a):

Expert Solution

Explanation of Solution

Figure -1 illustrates the market equilibrium that is arrived at equilibrium between the demand and supply curve.

Economics (Irwin Economics), Chapter 4, Problem 4P

In figure -1 panel (a) and (b), the horizontal axis measures the quantity of bags and the vertical axis measures the price per bag. The curve ‘S’ represents the supply and the curve ‘D’ represents the demand.

The inverse demand function can be derived as follows:

Price=PriceAt point 'a'+Equilibrium price−PriceAt point 'a'Q1−QuantityAt point 'a'(Quantity)=85+45−8520−0(Quantity)=85−2(Quantity)

The inverse demand functions of price=85−2(Quantity) .

The inverse supply curve can be calculated as follows:

Price=PriceAt point 'c'+Equilibrium price−PriceAt point 'c'Q1−QuantityAt point 'c'(Quantity)=5+45−520−0(Quantity)=5+2(Quantity)

The inverse supply functions of price=5+2(Quantity) .

The inverse demand function and supply functions reveal that the producer willing price is $5 and the consumer willing price is $85. The equilibrium price is $45. The total surplus can be calculated as follows:

Total surplus=12(Consumer willing price−Producer willing price)×Equilibrium quantity=12(85−5)×20=(80)×10=800

The total surplus is $800.

The consumer surplus can be calculated as follows:

Consumer surplus=12(Consumer willing price−Equilibrium price)×Equilibrium quantity=12(85−45)×20=(40)×10=400

The consumer surplus is $400.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Subpart (b):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart (b):

Expert Solution

Explanation of Solution

The consumer willing price at Q2 level of output (15 units) can be calculated by substituting the Q2 level of output to the inverse demand function.

Price=85−2(15)=85−30=55

The consumer new willing price is $55.

The producer willing price at Q2 level of output (15 units) can be calculated by substituting the Q2 level of output into the inverse supply function.

Price=5+2(15)=5+30=35

The producer’s new willing price is $35.

The deadweight loss can be calculated as follows:

Deadweight loss=12(Consumer new willing price−Producer new wlling price)×(Equilibrium quantity−New quantity)=12(55−35)×(20−15)=12(20)×(5)=50

The deadweight loss is $50.

The total surplus can be calculated as follows:

Total surplus=Initial total surplus−Deadweight loss=800−50=750

The total surplus is $750.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Subpart c):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart c):

Expert Solution

Explanation of Solution

The consumer willing price at Q3 level of output (27 units) can be calculated by substituting the Q3 level of output to the inverse demand function.

Price=85−2(27)=85−54=31

The consumer new willing price is $31.

The producer willing price at Q3 level of output (127 units) can be calculated by substituting the Q3 level of output to the inverse supply function.

Price=5+2(27)=5+54=59

The producer new willing price is $59.

The deadweight loss can be calculated as follows:

Deadweight loss=12(Consumer new willing price−Producer new wlling price)×(Equilibrium quantity−New quantity)=12(31−59)×(20−27)=12(−28)×(−7)=98

The deadweight loss is $98.

The total surplus can be calculated as follows:

Total surplus=Initial total surplus−Deadweight loss=800−98=702

The total surplus is $702.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 4, Problem 4P

Subpart (a):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart (a):

Expert Solution

Explanation of Solution

Figure -1 illustrates the market equilibrium that is arrived at equilibrium between the demand and supply curve.

Economics (Irwin Economics), Chapter 4, Problem 4P

In figure -1 panel (a) and (b), the horizontal axis measures the quantity of bags and the vertical axis measures the price per bag. The curve ‘S’ represents the supply and the curve ‘D’ represents the demand.

The inverse demand function can be derived as follows:

Price=PriceAt point 'a'+Equilibrium price−PriceAt point 'a'Q1−QuantityAt point 'a'(Quantity)=85+45−8520−0(Quantity)=85−2(Quantity)

The inverse demand functions of price=85−2(Quantity) .

The inverse supply curve can be calculated as follows:

Price=PriceAt point 'c'+Equilibrium price−PriceAt point 'c'Q1−QuantityAt point 'c'(Quantity)=5+45−520−0(Quantity)=5+2(Quantity)

The inverse supply functions of price=5+2(Quantity) .

The inverse demand function and supply functions reveal that the producer willing price is $5 and the consumer willing price is $85. The equilibrium price is $45. The total surplus can be calculated as follows:

Total surplus=12(Consumer willing price−Producer willing price)×Equilibrium quantity=12(85−5)×20=(80)×10=800

The total surplus is $800.

The consumer surplus can be calculated as follows:

Consumer surplus=12(Consumer willing price−Equilibrium price)×Equilibrium quantity=12(85−45)×20=(40)×10=400

The consumer surplus is $400.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Subpart (b):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart (b):

Expert Solution

Explanation of Solution

The consumer willing price at Q2 level of output (15 units) can be calculated by substituting the Q2 level of output to the inverse demand function.

Price=85−2(15)=85−30=55

The consumer new willing price is $55.

The producer willing price at Q2 level of output (15 units) can be calculated by substituting the Q2 level of output into the inverse supply function.

Price=5+2(15)=5+30=35

The producer’s new willing price is $35.

The deadweight loss can be calculated as follows:

Deadweight loss=12(Consumer new willing price−Producer new wlling price)×(Equilibrium quantity−New quantity)=12(55−35)×(20−15)=12(20)×(5)=50

The deadweight loss is $50.

The total surplus can be calculated as follows:

Total surplus=Initial total surplus−Deadweight loss=800−50=750

The total surplus is $750.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Subpart c):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart c):

Expert Solution

Explanation of Solution

The consumer willing price at Q3 level of output (27 units) can be calculated by substituting the Q3 level of output to the inverse demand function.

Price=85−2(27)=85−54=31

The consumer new willing price is $31.

The producer willing price at Q3 level of output (127 units) can be calculated by substituting the Q3 level of output to the inverse supply function.

Price=5+2(27)=5+54=59

The producer new willing price is $59.

The deadweight loss can be calculated as follows:

Deadweight loss=12(Consumer new willing price−Producer new wlling price)×(Equilibrium quantity−New quantity)=12(31−59)×(20−27)=12(−28)×(−7)=98

The deadweight loss is $98.

The total surplus can be calculated as follows:

Total surplus=Initial total surplus−Deadweight loss=800−98=702

The total surplus is $702.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 4, Problem 4P

Subpart (a):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart (a):

Expert Solution

Explanation of Solution

Figure -1 illustrates the market equilibrium that is arrived at equilibrium between the demand and supply curve.

Economics (Irwin Economics), Chapter 4, Problem 4P

In figure -1 panel (a) and (b), the horizontal axis measures the quantity of bags and the vertical axis measures the price per bag. The curve ‘S’ represents the supply and the curve ‘D’ represents the demand.

The inverse demand function can be derived as follows:

Price=PriceAt point 'a'+Equilibrium price−PriceAt point 'a'Q1−QuantityAt point 'a'(Quantity)=85+45−8520−0(Quantity)=85−2(Quantity)

The inverse demand functions of price=85−2(Quantity) .

The inverse supply curve can be calculated as follows:

Price=PriceAt point 'c'+Equilibrium price−PriceAt point 'c'Q1−QuantityAt point 'c'(Quantity)=5+45−520−0(Quantity)=5+2(Quantity)

The inverse supply functions of price=5+2(Quantity) .

The inverse demand function and supply functions reveal that the producer willing price is $5 and the consumer willing price is $85. The equilibrium price is $45. The total surplus can be calculated as follows:

Total surplus=12(Consumer willing price−Producer willing price)×Equilibrium quantity=12(85−5)×20=(80)×10=800

The total surplus is $800.

The consumer surplus can be calculated as follows:

Consumer surplus=12(Consumer willing price−Equilibrium price)×Equilibrium quantity=12(85−45)×20=(40)×10=400

The consumer surplus is $400.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Subpart (b):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart (b):

Expert Solution

Explanation of Solution

The consumer willing price at Q2 level of output (15 units) can be calculated by substituting the Q2 level of output to the inverse demand function.

Price=85−2(15)=85−30=55

The consumer new willing price is $55.

The producer willing price at Q2 level of output (15 units) can be calculated by substituting the Q2 level of output into the inverse supply function.

Price=5+2(15)=5+30=35

The producer’s new willing price is $35.

The deadweight loss can be calculated as follows:

Deadweight loss=12(Consumer new willing price−Producer new wlling price)×(Equilibrium quantity−New quantity)=12(55−35)×(20−15)=12(20)×(5)=50

The deadweight loss is $50.

The total surplus can be calculated as follows:

Total surplus=Initial total surplus−Deadweight loss=800−50=750

The total surplus is $750.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Subpart c):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart c):

Expert Solution

Explanation of Solution

The consumer willing price at Q3 level of output (27 units) can be calculated by substituting the Q3 level of output to the inverse demand function.

Price=85−2(27)=85−54=31

The consumer new willing price is $31.

The producer willing price at Q3 level of output (127 units) can be calculated by substituting the Q3 level of output to the inverse supply function.

Price=5+2(27)=5+54=59

The producer new willing price is $59.

The deadweight loss can be calculated as follows:

Deadweight loss=12(Consumer new willing price−Producer new wlling price)×(Equilibrium quantity−New quantity)=12(31−59)×(20−27)=12(−28)×(−7)=98

The deadweight loss is $98.

The total surplus can be calculated as follows:

Total surplus=Initial total surplus−Deadweight loss=800−98=702

The total surplus is $702.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Answer 6

Chapter 4, Problem 4P

Subpart (a):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart (a):

Expert Solution

Explanation of Solution

Figure -1 illustrates the market equilibrium that is arrived at equilibrium between the demand and supply curve.

Economics (Irwin Economics), Chapter 4, Problem 4P

In figure -1 panel (a) and (b), the horizontal axis measures the quantity of bags and the vertical axis measures the price per bag. The curve ‘S’ represents the supply and the curve ‘D’ represents the demand.

The inverse demand function can be derived as follows:

Price=PriceAt point 'a'+Equilibrium price−PriceAt point 'a'Q1−QuantityAt point 'a'(Quantity)=85+45−8520−0(Quantity)=85−2(Quantity)

The inverse demand functions of price=85−2(Quantity) .

The inverse supply curve can be calculated as follows:

Price=PriceAt point 'c'+Equilibrium price−PriceAt point 'c'Q1−QuantityAt point 'c'(Quantity)=5+45−520−0(Quantity)=5+2(Quantity)

The inverse supply functions of price=5+2(Quantity) .

The inverse demand function and supply functions reveal that the producer willing price is $5 and the consumer willing price is $85. The equilibrium price is $45. The total surplus can be calculated as follows:

Total surplus=12(Consumer willing price−Producer willing price)×Equilibrium quantity=12(85−5)×20=(80)×10=800

The total surplus is $800.

The consumer surplus can be calculated as follows:

Consumer surplus=12(Consumer willing price−Equilibrium price)×Equilibrium quantity=12(85−45)×20=(40)×10=400

The consumer surplus is $400.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Answer 7

Chapter 4, Problem 4P

Subpart (a):

To determine

The consumer surplus, total surplus and deadweight loss.

Answer 8

Subpart (a):

Expert Solution

Explanation of Solution

Figure -1 illustrates the market equilibrium that is arrived at equilibrium between the demand and supply curve.

Economics (Irwin Economics), Chapter 4, Problem 4P

In figure -1 panel (a) and (b), the horizontal axis measures the quantity of bags and the vertical axis measures the price per bag. The curve ‘S’ represents the supply and the curve ‘D’ represents the demand.

The inverse demand function can be derived as follows:

Price=PriceAt point 'a'+Equilibrium price−PriceAt point 'a'Q1−QuantityAt point 'a'(Quantity)=85+45−8520−0(Quantity)=85−2(Quantity)

The inverse demand functions of price=85−2(Quantity) .

The inverse supply curve can be calculated as follows:

Price=PriceAt point 'c'+Equilibrium price−PriceAt point 'c'Q1−QuantityAt point 'c'(Quantity)=5+45−520−0(Quantity)=5+2(Quantity)

The inverse supply functions of price=5+2(Quantity) .

The inverse demand function and supply functions reveal that the producer willing price is $5 and the consumer willing price is $85. The equilibrium price is $45. The total surplus can be calculated as follows:

Total surplus=12(Consumer willing price−Producer willing price)×Equilibrium quantity=12(85−5)×20=(80)×10=800

The total surplus is $800.

The consumer surplus can be calculated as follows:

Consumer surplus=12(Consumer willing price−Equilibrium price)×Equilibrium quantity=12(85−45)×20=(40)×10=400

The consumer surplus is $400.

Answer 9

Subpart (a):

Expert Solution

Answer 10

Subpart (a):

Expert Solution

Answer 11

Expert Solution

Answer 12

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Answer 13

Subpart (b):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart (b):

Expert Solution

Explanation of Solution

The consumer willing price at Q2 level of output (15 units) can be calculated by substituting the Q2 level of output to the inverse demand function.

Price=85−2(15)=85−30=55

The consumer new willing price is $55.

The producer willing price at Q2 level of output (15 units) can be calculated by substituting the Q2 level of output into the inverse supply function.

Price=5+2(15)=5+30=35

The producer’s new willing price is $35.

The deadweight loss can be calculated as follows:

Deadweight loss=12(Consumer new willing price−Producer new wlling price)×(Equilibrium quantity−New quantity)=12(55−35)×(20−15)=12(20)×(5)=50

The deadweight loss is $50.

The total surplus can be calculated as follows:

Total surplus=Initial total surplus−Deadweight loss=800−50=750

The total surplus is $750.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Answer 14

Subpart (b):

To determine

The consumer surplus, total surplus and deadweight loss.

Answer 15

Subpart (b):

Expert Solution

Explanation of Solution

The consumer willing price at Q2 level of output (15 units) can be calculated by substituting the Q2 level of output to the inverse demand function.

Price=85−2(15)=85−30=55

The consumer new willing price is $55.

The producer willing price at Q2 level of output (15 units) can be calculated by substituting the Q2 level of output into the inverse supply function.

Price=5+2(15)=5+30=35

The producer’s new willing price is $35.

The deadweight loss can be calculated as follows:

Deadweight loss=12(Consumer new willing price−Producer new wlling price)×(Equilibrium quantity−New quantity)=12(55−35)×(20−15)=12(20)×(5)=50

The deadweight loss is $50.

The total surplus can be calculated as follows:

Total surplus=Initial total surplus−Deadweight loss=800−50=750

The total surplus is $750.

Answer 16

Subpart (b):

Expert Solution

Answer 17

Subpart (b):

Expert Solution

Answer 18

Expert Solution

Answer 19

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Answer 20

Subpart c):

To determine

The consumer surplus, total surplus and deadweight loss.

Subpart c):

Expert Solution

Explanation of Solution

The consumer willing price at Q3 level of output (27 units) can be calculated by substituting the Q3 level of output to the inverse demand function.

Price=85−2(27)=85−54=31

The consumer new willing price is $31.

The producer willing price at Q3 level of output (127 units) can be calculated by substituting the Q3 level of output to the inverse supply function.

Price=5+2(27)=5+54=59

The producer new willing price is $59.

The deadweight loss can be calculated as follows:

Deadweight loss=12(Consumer new willing price−Producer new wlling price)×(Equilibrium quantity−New quantity)=12(31−59)×(20−27)=12(−28)×(−7)=98

The deadweight loss is $98.

The total surplus can be calculated as follows:

Total surplus=Initial total surplus−Deadweight loss=800−98=702

The total surplus is $702.

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.

Answer 21

Subpart c):

To determine

The consumer surplus, total surplus and deadweight loss.

Answer 22

Subpart c):

Expert Solution

Explanation of Solution

The consumer willing price at Q3 level of output (27 units) can be calculated by substituting the Q3 level of output to the inverse demand function.

Price=85−2(27)=85−54=31

The consumer new willing price is $31.

The producer willing price at Q3 level of output (127 units) can be calculated by substituting the Q3 level of output to the inverse supply function.

Price=5+2(27)=5+54=59

The producer new willing price is $59.

The deadweight loss can be calculated as follows:

Deadweight loss=12(Consumer new willing price−Producer new wlling price)×(Equilibrium quantity−New quantity)=12(31−59)×(20−27)=12(−28)×(−7)=98

The deadweight loss is $98.

The total surplus can be calculated as follows:

Total surplus=Initial total surplus−Deadweight loss=800−98=702

The total surplus is $702.

Answer 23

Subpart c):

Expert Solution

Answer 24

Subpart c):

Expert Solution

Answer 25

Expert Solution

Answer 26

Economics Concept Introduction

Concept Introduction:

Consumer surplus: It refers to the variation in the probable charge of a product that the consumer intends to pay and the actual price that he has already paid.

Producer surplus: It refers to the variation in the probable price that the producer intends to sell and the actual price that he has already sold.