What are the consumer surplus and producer surplus at the current market rent?
Homework Answers
Equilibrium price and quantity should be identified first. The point of intersection between demand and supply is equilibrium; the corresponding dollar rent on vertical axis is equilibrium price (450) and the corresponding quantity on horizontal axis is equilibrium quantity (20).
Consumer surplus (CS) is based on the demand curve.
CS = 0.5 × (Maximum willingness to pay – equilibrium price) × equilibrium quantity
= 0.5 × (750 – 450) × 20
= 0.5 × 300 × 20
= $3,000 (Answer)
Producer surplus (PS) is based on the supply curve.
PS = 0.5 × (Equilibrium price – minimum accepted price) × equilibrium quantity
= 0.5 × (450 – 150) × 20
= 0.5 × 300 × 20
= $3,000 (Answer)
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Question: Consider the houses are randomly allocated such that
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surplus and producer surplus when a rent ceiling is set at
$300/month?
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Consider houses were randomly allocated such that the average valie
to consumers is $525. what are the consumwr surplus and producer
surplus with a rent cieling of $300/month.
Question 2 [BR1|3.5] The figure shows the demand (downward sloping straight line) for and the supply (upward sloping straight line) of rental houses in Countryside. Currently, the market is in equilibrium Rent (dollars per month) 30 20 Quantity (thousands)
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The following graph shows the domestic demand and domestic
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green point (triangle symbol) to...
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demand in the market for smartphones. Use the black point (plus
symbol) to indicate the equilibrium price and quantity of
smartphones. Then use the green point (triangle symbol) to fill the
area representing consumer surplus, and use the purple point
(diamond symbol) to fill the area representing producer
surplus.
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