Illustrate the producer surplus before and after customers

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Reference no: EM133596494

Problem

Elmer is a monopolist in the carrot industry. His customers have formed an organization that proposes to rent the carrot patch from Elmer and operate it for the mutual good of the customers.

1. Illustrate the consumer surplus before and after the customers take over.

2. Illustrate the producer surplus before and after the customers take over.

3. Using the diagram you used to answer questions 1 and 2, show the lowest rental fee that Elmer will accept and the highest rental fee customers are willing to pay. Does the deal get struck?

Reference no: EM133596494

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