2 Consider a market in which Bert from Problem 4 is the buyer and Ernie from

2 consider a market in which bert from problem 4 is

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2. Consider a market in which Bert from Problem 4 is the buyer and Ernie from Problem 5 is the seller. a. Use Ernie's supply schedule and Bert's demand schedule to find the quantity supplied and quantity demanded at  prices of $2, $4, and $6. Which of these prices brings supply and demand into equilibrium? b. What are consumer surplus, producer surplus, and total surplus in this equilibrium? c. If Ernie produced and Bert consumed one fewer bottle of water, what would happen to total surplus? d. If Ernie produced and Bert consumed one additional bottle of water, what would happen to total surplus? 3. The cost of producing flat-screen TVs has fallen over the past decade. Let's consider some implications of this fact. a. Draw a supply-and-demand diagram to show the effect of falling production costs on the price and quantity of  flat-screen TVs sold. b. In your diagram, show what happens to consumer surplus and producer surplus.
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c. Suppose the supply of flat-screen TVs is very elastic. Who benefits most from falling production costs— consumers or producers of these TVs? 4. There are four consumers willing to pay the following amounts for haircuts: 5. Jerry: $7    Oprah: $2    Ellen: $8    Phil: $5 6. There are four haircutting businesses with the following costs: 7. Firm A: $3    Firm B: $6    Firm C: $4    Firm D: $2 8.Each firm has the capacity to produce only one haircut. For efficiency, how many haircuts should be given? Which businesses should cut hair and which consumers should have their hair cut? How large is the maximum possible total surplus? 9. Suppose a technological advance reduces the cost of making computers. a. Draw a supply-and-demand diagram to show what happens to price, quantity, consumer surplus, and producer  surplus in the market for computers. b. Computers and typewriters are substitutes. Use a supply-and-demand diagram to show what happens to price,  quantity, consumer surplus, and producer surplus in the market for typewriters. Should typewriter producers be  happy or sad about the technological advance in computers? c. Computers and software are complements. Draw a supply-and-demand diagram to show what happens to price,  quantity, consumer surplus, and producer surplus in the market for software. Should software producers be happy  or sad about the technological advance in computers?
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