Question

The figure on the right displays the market for video game consoles, where nine buyers are interacting with nine sellars. According to this ligure, the equiibrium price is 3 250, and at thst price, the equilibrium quantity is 5 When the market is in equiitrium, sociel surplus is Markat for Vidao Game Consoles Quanity

Answer 1

Consumer surplus is the difference between what the buyer is willing to pay and the market price. Consumers who pay above the market price will have consumer surplus. Consumer surplus is the area below demand curve and above market price

Buyer1 is willing to pay $450. His consumer surplus is $450-$250=$200.

Buyer2 is willing to pay $400. His consumer surplus is $400-$250=$150.

Buyer3 is willing to pay $350. His consumer surplus is $350-$250=$100.

Buyer4 is willing to pay $300. His consumer surplus is $300-$250=$50.

Total consumer surplus is $200 + $150 + $100 + $50=$500.

Producer surplus is the difference between the market price and the minimum price the seller is willing to sell. Producer surplus is the area above supply curve and below market price.

Seller1 is willing to sell for $50, his producer surplus is $250-$50=$200.

Seller2 is willing to sell for $100, his producer surplus is $250-$100=$150.

Seller3 is willing to sell for $150, his producer surplus is $250-$150=$100.

Seller4 is willing to sell for $200, his producer surplus is $250-$200=$50.

Total producer surplus is $200 + $150 + $100 + $50=$500.

Total social surplus= Consumer surplus + producer surplus= $500 + $500=$1,000.