can You guys help with the exact answer please no wrong answers I need answers f

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can You guys help with the exact answer please no wrong answers I need answers for the graph and how many million it will be thanks alot

Attempts: Keep the Highest: /2 7. Total economic surplus The following diagram shows supply and demand in the market for smart phones. Use the black point (plus symbol) to indicate the equilibrium price and quantity of smart phones. 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. 150 T Demand Equilibrium 120t Consumer Surplus a 90 2 75 60 45 30 Producer Surplus Supply 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Millions of phones) Total surplus in this market is$ milion

Explanation / Answer

In the given figure, equilibrium is attained at point where demand curve is intersecting the supply curve.

Price on Y-axis corresponding to this point is the equilibrium price. In given case, it is $75/phone.

Quantity on X-axis corresponding to this point is the equilibrium quantity. In given case, it is 200 million phones.

Calculate Consumer surplus –

One can see that demand curve is touching Y-axis at 135. So, $135 is maximum willing to pay price of consumer. In other words, consumers are at most willing to pay $135 for a phone and not higher than that.

Equilibrium price is $75/phone. Equilibrium quantity is 200 million phones

So, consumer surplus can be calculated as follows –

CS = 1/2[(Maximum willingness to pay price – Equilibrium price)*Equilibrium quantity]

CS = 1/2[ ($135 - $75)*200 million]

CS = $6,000 million

Calculate Producer surplus –

One can see that supply curve is touching Y-axis at 15. So, $15 is lowest price that producers are ready to accept. In other words, producer are ready to accept $15 at minimum for a phone but not less than that.

Equilibrium price is $75/phone. Equilibrium quantity is 200 million phones

So, producer surplus can be calculated as follows –

PS = 1/2[(Equilibrium price – Minimum acceptable price)*Equilibrium quantity]

PS = 1/2[($75 - $15)*200 million]

PS = $6,000 million

Total surplus = Consumer surplus + Producer surplus

                      = $6,000 million + $6,000 million

                      = $12,000 million

Thus, total surplus is $12,000 million.

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