ECON 1B03 Lecture Notes - Lecture 15: Economic Surplus, Economic Equilibrium, Demand Curve

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15 Feb 2016

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ECON 1B03 Full Course Notes

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Workshop externalities, welfare, public goods, price controls. Set supply equal to demand: 300-p = 4p , so p = equilibrium price. Sub this in to either equation to get equilibrium quantity = 240 units. Sketch: first solve for the intercepts set equations equal to 0, Consumer surplus area below demand curve and above equilibrium price. Difference between what consumers are willing to pay and the total amount they actually pay ie consumer benefit. Benefit to suppliers who sell at price higher than they are willing to produce for. Area above supply curve but below equilibrium price. Ps= ((60-0)(240))= : government freezes price level at . Plug the new price into the equations to find the value of the shortage. Shortage = qd qs = 255 -180 = 75 units. The new consumer surplus is between the price freeze and the new. Plug the new qs into demand surplus ---- 180 = 300-p, p = 120.

Related Questions

The government is considering three alternative policies to restrict alcohol drinking. The supply and demand curves are as follows: Demand: Qd = 300 - P Supply: Q:=P/2 where P is measured in cents and Q is measured in millions of bottles per month. a. Graph the supply and demand curves. Identify the P and Q intercepts for the demand curve and the P and Q intercept for the supply curve. Solve for the equilibrium price and quantity. Show the equilibrium in the graph. [10 marks]

Suppose that the demand for broccoli is given by:

Demand: Q= 1,000 - 5P

Where Q is quantity per year measured in hundreds of bushels and P is price in dollars per hundred bushels. The long-run supply curve for broccoli is given by

Supply: Q= 4p - 80

A) Show that the equilibrium quantity here is Q=400. At this output, what is the equilibrium price? How much in total is spent on broccoli? What is consumer surplus at this equilibrium? What is producer surplus at this equilibrium?

B) How much in total consumer and producer surplus would be lost if Q=300 instead of Q=400?

C) Show how the allocation of the loss of total consumer and producer surplus between suppliers and demanders described in part b depends on the price at which broccoli is sold. How would the loss be shared if P=140? How about if P=95?

D) What would the total loss of consumer and producer surplus be if Q=450 rather than Q=400? Show that the size of this total loss also is independent of the price at which the broccoli is sold.

E) Graph your results.

silvercat77

A market is described by the following supply-and-demand curves:

Qs=2P

Qd= 300-P

Solve for equilibrium price and quantity.

sapphirehare17

ECON 1B03 Lecture Notes - Lecture 15: Economic Surplus, Economic Equilibrium, Demand Curve

ECON 1B03 Full Course Notes

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