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3 years ago

For each scenario, decide whether it creates a producer or a consumer surplus. Then, calculate the ensuing surplus.

Business

1 answer:

Gnom [1K]3 years ago

5 0

Answer:

Alice's consumer surplus = $5

Jeff's consumer surplus = $16

Nicole's producer surplus = $1

Explanation:

Consumer surplus is the difference between the willingness to pay of a consumer and the price of a good.

Consumer surplus = willingness to pay - price of the good

Producer surplus is the difference between the price of a good and the least price the producer is willing to accept

Producer surplus = price of the good - least price the producer is willing to accept

Alice's consumer surplus = $30 - ($35 - $10) = $5

Jeff's consumer surplus = $20 - [$16 - (0.75 x $16)] = $16

Nicole's producer surplus = $501 - $500 = $1

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Given that,

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22500 = 0.5 × 3 × (100000 - $Q_{a}$ )

$Q_{a}$ = 85000 units

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When the price of a good is $5, the quantity demanded is 120 units per month; when the price is $7, the quantity demanded is 100

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