Correction Q4

Correction Q4 - Correction Q4 p14 The Consumer surplus was computed incorrectly as q(1000 p 1 instead of Q(1000 p 1 where q is the quantity

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Correction Q4, p14 . The Consumer surplus was computed incorrectly as q (1000 p ) 1 2 instead of Q (1000 p ) 1 2 , where q is the quantity supplied by a Q we are not going to ask you a question like Q4 in the exam. This question was very challenging. The solution to Q4 is correct until the very last paragraph. The last paragraph should be: = 7400 , for a total producer surplus of N = 4 ± 7400 = 29 ; 600 . Consumer surplus is still given by 1 2 base times height, where the height is the distance between the y-intercept and the price: h = 1000 280 = 720 . The base is still given by the TOTAL quantity supplied Q = 720 . So CS = 1 2 720 2 = 259 200 . And government surplus is GS = 4 ± 15 ; 000 = 60 ; 000 . Total surplus is TS = PS + CS + GS = 29600 + 1 2 720 2 + 60000 = 348 800 This is clearly LARGER than the original surplus of 320,000." Explanation
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This note was uploaded on 12/10/2011 for the course ECON 401 taught by Professor Burbidge,john during the Winter '08 term at Waterloo.

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Correction Q4 - Correction Q4 p14 The Consumer surplus was computed incorrectly as q(1000 p 1 instead of Q(1000 p 1 where q is the quantity

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