4. Consider a perfectly elastic supply curve, at p = 10, along with a perfectly inelastic...
4. Consider a perfectly elastic supply curve, at p = 10, along with a perfectly inelastic demand curve, at q = 103. Calculate the Consumer Surplus and the Producer Surplus in this market. Show your work. (10%)
Homework Answers
Answer
the both are zero as the
producer surplus is the area above supply and below price but there is nothing
consumer surplus is the area below the demand curve and above price so there is no consumer surplus
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4. Consider a perfectly elastic supply curve, at p = 10, along
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3. Consider a perfectly inelastic supply curve at q = 1,013, and a perfectly elastic demand curve at p = 101. A subsidy of $5 per unit is given to producers. Using a diagram, explain how the subsidy is shared between consumers and producers. What is the Deadweight Loss? (30%)
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4) Consider the following perfectly competitive market for board games: (Do NOT round values.) (2...
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A monopoly has A. A perfectly elastic demand curve B. A perfectly elastic supply curve C....
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4) Consider the following perfectly competitive market for board games: (Do NOT round values.) (22 marks) Q-204P Qd-300 - P a) Calculate initial equilibrium supply and demand. b) Calculate consumer and producer surplus. Show graphically c) Realizing that board games are awesome, the government creates a $50 price ceiling. Recalculate new equilibrium quantities. Show graphically d) Calculate consumer surplus, producer surplus, and deadweight loss for the worst case scenario. Show graphically
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The perfectly competitive firm's demand curve is: Perfectly elastic. Relatively elastic Perfectly inelastic. Relatively inelastic Statement 1: In the long run, firms in a monopolistically competitive industry will be producing that quantity that maximize social surplus. Statement 2: In the long run, firms in a monopolistically competitive industry will be producing at the minimum of its ATC curve. Statement (1) is true; statement (2) is false. Statements (1) and (2) are both true. Statement (1) is false; statement (2) is...
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