ECON 0110 Lecture Notes - Lecture 8: Economic Surplus, Demand Curve

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blacklizard105

1 Nov 2015

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Consumer surplus: difference between the maximum amount that consumers would be willing to pay to purchase a given quantity of output and the amount they actually pay. Area under the demand curve and above the selling price. Producer surplus: difference between the amount that producers actually receive when they sell a given quantity of output and the minimum amount they would be willing to accept to sell that output. Area above the supply curve and below the selling price. Effects of a tariff jkacbdefghipw = world price without tariffpt = price in us with tariffus supplyus demandquantity of sugar purchased in the usq2q4q3q5ptpwprice of sugareffects of a tariffsuppose the selling price is the world price pw. Consumer surplus equals the following areas: a, b, c, d, j and k. Now consumer surplus equals the areas j and k. Suppose the selling price after the tariff is pt. Government collects a tariff of (pt pw) on the quantity (q5 q4).

Related Questions

7) Indicate whether each of the following statements is true or false, and explain why.

A. Producer surplus tends to fall as the supply curve becomes more elastic.

B. Consumer surplus tends to rise as demand becomes more elastic.

C. The market demand curve indicates the minimum price buyers are willing to pay at each level of production.

D. The market supply curve indicates the minimum price required by sellers as a group to bring forth production.

E. Consumer surplus is the amount that consumers are willing to pay for a given good or service above and beyond the amount actually paid.

bronzeoyster264

10. Producer surplus is the A) difference between the maximum price consumers are willing to pay and the minimum price producers are willing to accept. B) difference between producers' revenues and opportunity costs of production. C) opportunity cost of production. D) area under the supply curve. E) total amount paid for the good.

1. Consumer surplus is equal to the difference between

a. the maximum price a buyer is willing to pay and the market price.

b. the minimum price a buyer is willing to pay and the market price.

c. the maximum price a setter is willing to accept and the market price.

d. the minimum price a seller is willing to accept and the market price.

2. Consumer surplus is shown graphically as the area

a. under the demand curve and above market price.

b. above the supply curve and above the market price.

c. above the supply curve and below the market price.

d. under the demand curve and below the market price.

brownantelope470

ECON 0110 Lecture Notes - Lecture 8: Economic Surplus, Demand Curve

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