HW chap 14-3

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Unformatted text preview: ole number and prices to 2 decimal places. a. What is consumer surplus at the competitive market equilibrium? 8 ± 0.01 . \$ b. What is producer surplus at the competitive market equilibrium? \$ 8 ± 0.01 . c. What is aggregate surplus at this equilibrium? 16 ± 0.01 . \$ rev: 18_11_2013_QC_40355 Explanation: First, equate the demand function to the supply function to solve for equilibrium price and quantity: Qd = Qs 21 – 4P = 4P – 5. P* = \$3.25. Q* = 8 billion bushels. We know that: At P = (5/4), Qs = 0. At P = 5.25, Qd = 0. Now we can compute the areas of the triangles. a. CS = 0.5(8) × (5.25 – 3.25) CS = 8.00. b. PS = 0.5(8) × (3.25 – 1.25) PS = 8.00. c. AS = 8 + 8 AS = 16.00. http://e z to.mhe c loud.mc gr a w- hill.c om/hm.tpx? todo= pr intvie wSingle 2/2...
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