a. The market or equilibrium price is $__________. b. The economic value of
ID: 1225866 • Letter: A
Question
a. The market or equilibrium price is $__________.
b. The economic value of the 10,000th unit is $__________, and the minimum price producers will accept to produce this unit is $__________.
c. When 10,000 units are produced and consumed, total consumer surplus is $__________, and total producer surplus is $__________.
d. At the market price in part a, the net gain to consumers when 10,000 units are purchased is $__________.
e. At the market price in part a, the net gain to producers when they supply 10,000 units is $__________.
f. The net gain to society when 10,000 units are produced and consumed at the market price is $__________, which is called __________.
g. In market equilibrium, total consumer surplus is $__________, and the total producer surplus is $__________.
h. The net gain to society created by this market is $__________.
60 52.50 50 42.50 40 37.50 3 20 15 10 10,000 20,000 30,000 40,000 50,000 60,000 15,000 Quantity demanded and suppliedExplanation / Answer
a. The market or equilibrium price is $37.50.
b. The economic value of the 10,000th unit is $42.50, and the minimum price producers will accept to produce this unit is $30.
c. When 10,000 units are produced and consumed, total consumer surplus is $.5 x (52.5-42.5) x 10000=$50000, and total producer surplus is $.5 x (30-15) x 10000+(42.5-30) x 10000=$.5 x 15 x 10000+12.5 x 10000=$200000.
d. At the market price in part a, the net gain to consumers when 10,000 units are purchased is $(42.5-37.5) x 10000=$50000 .
e. At the market price in part a, the net gain to producers when they supply 10,000 units is $(37.5-30) x 10000=$75000 .
f. The net gain to society when 10,000 units are produced and consumed at the market price is $$50000+$200000=$250000 See Part C, which is called Total Surplus.
g. In market equilibrium, total consumer surplus is $.5 x (52.5-37.5) x 15000=$.5 x 15 x 15000=$112500, and the total producer surplus is $.5 x (37.5-15) x 15000=$168750.
h. The net gain to society created by this market is $112500+$168750=$281250.
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