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QUESTION 2 Questions 1-6: The diagram below depicts the supply and demand curves for bicycles. Use the diagram to answer the following questions 1 to 6. Price (5unit 150 Supply LS 120 70 Demand 10 100 200 300 of international trade, what is consumer surplus and producer a. consumer surplus S6,000 producer surplus $8,000 b. consumer surplus = $8,000 ; producer surplus = $6,000 O c, consumer surplus = $12,000 ; producer surplus = $4,000 □d. consumer surplus= $14,000 ; producer surplus= $14,000

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QUESTION Questions 1-6: The diagram below depicts the supply and demand curves for bicycles. Use the diagram to answer the following questions 1 to 6 The industry reaches to equilibrium where the demand equals to supply in the absence of internation trade. In the question the equilibrium price will be $70 and Price (S/unit) 150 Supplythe output will be 200 units. 120CS The consumer surplus is the triangle above the price line and producers surplus is the triangle below the price like but above the supply curve. To calculate the CS and PS, we have to use the 70 PS Demand formula of area of triangle. 10 100 200 300 Quantity 2. In the absence of international trade, what is consumer surplus and producer surplus in the equilibrium? a. consumer surplus S6,000 producer surplus $8,000 CS 1/2 (Base Height) CS1/2 (200*80)- $8,000 Height - 150 7080 PS 1/2 (Base Height) Base 200 consumer surplus $8,000 ; producer surplus $6,000Base - 200 c, consumer surplus = $12,000 ; producer surplus = $4,000 consumer surplus S14,000 producer surplus $14,000 PS 1/2 (200*60) $6,000 Height - 70 10 60

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