Figure 1: Markel IUT CE PHONES Price (dollars per cell phone) 50 • 100 150 200 Quantity (cell phones per month) a)...

Question

Question

Answer 1

Answer #1

As it can be seen in the diagram that demand and supply curve intersect at price $30 and quantity 100 units.

Since this is an efficient outcome, therefore there will be no dead weight loss.

Total surplus is the area of triangle made between demand and supply curve.

Area of triangle=0.5*B*H

=0.5*100*(60-15)

=50*45

=$2,250

It means this is an efficient outcome and total surplus is $2,250.

Hence option a is the correct answer.

Answer 2

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