Question

Number 4 please.

Quantit broadband servi (100s of subscriber surbers,3. Combine the graphs and equations from questions and 2 and determine the following: a. The equilibrium price of broadband Internet s of the broadband and B service b. The equilibrium quantity of broadband Internet service c. Consumer surplus d. Producer surplus e. The total surplus received by producers and con- sumers together 4. Increases in demand generally result in increases in consumer surplus. But that's not always true. Illus- Quantity of dband services of subscribers) he next column, trate a situation in which an increase in demand actu- ally results in a decrease in consumer surplus. What conditions on the supply side of the market make this more likely to occur? and Internet ser- 5. The Ministry of Tourism in the Republic of Palau es- 6,000 -20P, where Q is the number e is given by Q ntity of services month. Assume $25 per month. timates that the demand for its scuba diving tours is given by O of divers served each month and P is the price of a two-tank dive. The supply of scuba diving tours is given by QS 30P 2,000. a. Solve for the equilibrium price and quantity b. Find the value of the consumer surplus icular attention iders will sup- ducers for that ppliers, area D received by divers visiting Palau. Hint: It may help to draw a graph.) a What is the cost to g

Answer 1

4)

Usually, rise in demand leads to rise in consumer surplus provided there is no change in price and supply.

But if rise in demand is accompanied by the fall in supply and rise in price, then there shall be fall in consumer surplus.

Increase in demand leads to rise in Consumer surplus but rise in price reduces the consumer surplus. Hence, if these demand effects are smaller than the price effect, there shall be fall in consumer surplus despite rise in demand.

Fall in supply puts the upward pressure on price level. Rise in price reduce the quantity demanded.