From the it must be the case for each firm, the options are marginal cost, total

Question

From the it must be the case for each firm, the options are marginal cost, total cost or average cost and then the options are 30, 70 or greater then 70 or 0.

12. How Consumer Surplus Relates to Values and Costs Aa Aa The following graph shows the market for wheat. The downward-sloping (blue) line represents demand, and the upward-sloping (orange) line represents supply. The market is perfectly competitive and currently in equilibrium at a price of 70 per tonne On the graph, use the green triangle (triangle symbols) to shade in the area representing consumer surplus Tool Tip: You can mouse over the shaded region on the graph to find its area PRICE (Euros per tonnel 100 CS 80 60 40 20 10 QUANTITY (Thousands of tonnes Help Clear AlL At a price of 70, all consumers who choose to buy a tonne of wheat value them at information, consumer surplus in this market is . Given this . (Hint: Note the units on the X-axis.) It must be the case that for each firm that produces wheat, the produced is of the last tonne of wheat True or False: When the price of a tonne of wheat is 77, there is deadweight loss in this market. O False O True

Explanation / Answer

1. At 1 tonne, valuation of consumer corresponding to demand curve is $85

2. Consumer surplus = Area below demand curve and above price line

Consumer surplus = (1/2)(90-70)(6) = 60

3. Marginal cost

4. Equal to 70 (as in perfectly competitive firms, P = MC)

5. True (as there is inefficiency)

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