Answers to Study Questions Set 3 Chapter 4 Question 17 Refer to Table 4.5. If the six people listed in the table are the only consumers in the market and the equilibrium price is $11 (not the $8 shown), how much consumer surplus will the market generate? The total consumer surplus will be $3 ($2 for Bob, $1 for Barb, $0 for Bill, and Bart, Brent, and Jenny will not purchase the good at a price of $11). Chapter 4 Question 18 Refer to Table 4.6. If the six people listed in the table are the only producers in the market and the equilibrium price is $6 (not the $8 shown), how much producer surplus will the market generate? The total producer surplus will be $6 ($3 for Carlos, $2 for Courtney, $1 for Chuck, $0 for Cindy, and Craig and Chad will not sell at a price of $6). Chapter 4 Question 19 Draw a supply and demand graph and identify the areas of consumer and producer surplus. Given the demand curve, what impact will an increase in supply have on the amount of consumer surplus shown in your diagram? Explain why.
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This note was uploaded on 10/13/2009 for the course ECON 1220 taught by Professor Evans during the Winter '08 term at Langara.