Explain how consumer surplus is derived from the difference between the willingness to pay and the...
Explain how consumer surplus is derived from the difference between the willingness to pay and the market equilibrium price. Please use examples to support your posting.
Homework Answers
Suppose that the price of a good is a determined at $10 per unit. Now different consumers have different valuation of that good which then determines their willingness to pay for its purchase. Suppose A can pay $20, B can pay $15 and C and pay $10. D cannot pay more than $5 so when the price is set at $10 per unit, D leaves the market due to the good becoming unaffordable for her. A has a consumer surplus (difference between willingness to pay and the price actually paid) of $20 - $10 = $10 while B has a consumer surplus of $5. C does not earn a consumer surplus because her willingness to pay is same as the market price. Overall the consumer surplus is $10 + $5 = $15 for the 2 units sold.
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Explain how consumer surplus is derived from the difference
between the willingness to pay and the...
Explain how consumer surplus is derived from the difference between the willingness to pay and the...
Explain how consumer surplus is derived from the difference between the willingness to pay and the market equilibrium price. Please use examples to support your posting.
Producer surplus is the Group of answer choices the difference between the willingness to sell and...
Producer surplus is the Group of answer choices the difference between the willingness to sell and the willingness to buy. the difference between the price and the opportunity cost of production. total revenues. the difference between what the consumer offered and the actual price.
3. Please describe your willingness to pay for a certain good, in terms of dollars. Given...
3. Please describe your willingness to pay for a certain good, in terms of dollars. Given the current price of that good, what is your consumer surplus? Now imagine you run a business that sells a good of your choice. How would you use information on consumer's willingness to pay to determine the price at which you sell your good? Please describe the cost of production, average willingness to pay, and consumer and producer surpluses in your example. 4. In...
Question 1 Consumer surplus is the difference between the A market price and the minimum price...
Question 1 Consumer surplus is the difference between the A market price and the minimum price required to induce production B full economic price and the minimum price required to induce production market price and the maximum willingness to pay of consumers D) quantity demanded and the quantity supplied at the market price Question 2 If an increase in the price of hot tea decreases the demand for honey, this indicates that A the two goods are substitutes the two...
Which of the following best defines producer surplus? O The difference between the price that suppliers...
Which of the following best defines producer surplus? O The difference between the price that suppliers actually O A situation in which all of the potential gains from trade have been realized. O The difference between the price that suppliers actually receive and the minimum price they would be willing to accept. receive and the maximum price they would be willing to accept. O The difference between the maximum price consumers are willing to pay and the price they actually...
1 Consumer surplus is defined as the: gap between the supply curve and the market price....
1 Consumer surplus is defined as the: gap between the supply curve and the market price. difference between a price ceiling and the market price. difference between a price floor and the market price. gap between the demand curve and the market price. 2. graph Mackenzie's demand for gasoline is shown in the graph provided. Part 1: The current price is $3.00 per gallon. Use the double drop line tool to indicate the current price and quantity combination. Label this...
The only four consumers in a market have the following willingness to pay for a goou:...
The only four consumers in a market have the following willingness to pay for a goou: Buyer Willingness to Pay Carlos $15 bulana S25 Wilbur $35 Ming-la $45 a. If the market price for the good is $20, who will purchase the good? b. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, how much will the good will sell for and who will likely buy...
MC Qu. 51 Consumer surplus... Consumer surplus points Multiple Choice rises as equilibrium price rises is...
MC Qu. 51 Consumer surplus... Consumer surplus points Multiple Choice rises as equilibrium price rises is the difference between the minimum price producers are willing to accept for a product and the higher equilibrium price s the difference between the maximum price consumers are willing to pay for a product and the minimum price producers are willing to accept s the difference between the maximum price consumers are willing to pay for a product and the lower equilibrium price MC...
Suppose four people are each interested in buying a mango smoothie. Consumer Willingness to pay Mark...
Suppose four people are each interested in buying a mango smoothie. Consumer Willingness to pay Mark $7 Mary $6 Mike $5 Mitch $4 a. If the price of the mango smoothie is $4.5: What is the consumer surplus of each of the people? What is the total consumer surplus in this market b. If the price of the mango smoothie drops to is $3.5: What is the consumer surplus of each of the people? What is...
1. Below is the marginal willingness to pay of a consumer for organic apples. 2.00 1.20...
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Question 1 Consumer surplus is the difference between the A market price and the minimum price required to induce production B full economic price and the minimum price required to induce production market price and the maximum willingness to pay of consumers D) quantity demanded and the quantity supplied at the market price Question 2 If an increase in the price of hot tea decreases the demand for honey, this indicates that A the two goods are substitutes the two...
Which of the following best defines producer surplus? O The difference between the price that suppliers actually O A situation in which all of the potential gains from trade have been realized. O The difference between the price that suppliers actually receive and the minimum price they would be willing to accept. receive and the maximum price they would be willing to accept. O The difference between the maximum price consumers are willing to pay and the price they actually...
The only four consumers in a market have the following willingness to pay for a goou: Buyer Willingness to Pay Carlos $15 bulana S25 Wilbur $35 Ming-la $45 a. If the market price for the good is $20, who will purchase the good? b. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, how much will the good will sell for and who will likely buy...
MC Qu. 51 Consumer surplus... Consumer surplus points Multiple Choice rises as equilibrium price rises is the difference between the minimum price producers are willing to accept for a product and the higher equilibrium price s the difference between the maximum price consumers are willing to pay for a product and the minimum price producers are willing to accept s the difference between the maximum price consumers are willing to pay for a product and the lower equilibrium price MC...
1. Below is the marginal willingness to pay of a consumer for organic apples. 2.00 1.20 1.00 0.80 0.50 0.30 What is the individual's total willingness to pay at a consumption level of 4 apples? a. 2. The market demand for a commodity is made up by two consumers, Ants and Birgit. Their individual demand schedules are depicted in the table. Fill in the empty column and draw the demand schedule. Price Quantity demanded Quantity demanded Market demand in euro...
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