What is the consumer surplus and producer surplus

Assignment Help Business Economics

Reference no: EM131095491

Suppose that the market demand is Q = 100 - P First, consider a competitive industry where MC = AC = 20 for each firm in this industry

(a) What is the equilibrium quantity Qc in the market? What is the equilibrium price Pc?

(b) What is the consumer surplus, producer surplus and total surplus? Shade or indicate the relevant areas in a figure of a perfectly competitive industry (for the equilibrium quantity in the industry assume that there are 100 firms). Call this figure- Fig.1

Now, consider the same demand curve faced by a monopolist, whose costs are MC = AC = 20

(d) Calculate the monopolist's profit.

(e) Calculate the consumer surplus, producer surplus and total surplus in this market and compare it with the perfectly competitive case. Indicate these on Fig.2

Reference no: EM131095491

Questions Cloud

Calculate the optimal combination of inputs : Solve the contractors problem given a general input-cost-function. Calculate the optimal combination of inputs. Illustrate the change on the production function in general, you don’t need numbers.

Do you think pornography is harmful to american society : Our Discussion for this week will focus on prostitution and pornography. Please respond to the following questions/statements: Do you think pornography is harmful to American society? Do you think that pornography should be restricted in the United S..

Demand for the orange decreased between years : Suppose that in Florida between 2006- 2009 the prices of oranges increased, and then between 2011- 2013 quantity of oranges sold decreased. Could it be possible that the demand for the orange decreased between years 2006 and 2009 and again between 20..

Use demand and supply diagrams when needed : Price data shows that banana prices were steady between years 2009-2011, and then increased from about $2-$3 per kilo to $13-$16 dollars per kilo after February 2011. Discuss the factors and mechanisms that have causes these patterns of price change...

What is the consumer surplus and producer surplus : Suppose that the market demand is Q = 100 - P First, consider a competitive industry where MC = AC = 20 for each firm in this industry. What is the equilibrium quantity Qc in the market? What is the equilibrium price Pc? What is the consumer surplu..

Investigate the clustering process performed : The purpose of this computer experiment is to investigate the clustering process performed by the K-means algorithm.

What movements in in supply and demand : What movements in in supply and demand would be consistent with the increase in Banana prices ( prices increased due to heavy rains washing out banana crops for that year)? Discuss the factors and mechanisms that have causes these patterns of price c..

Non metric quientessesnce : Write a thesisof 90 pages on Non - Metric quientessesnce

How does gold exemplify characteristics of good currency : How does gold exemplify characteristics of a good currency? Yes, why is gold money, and how could gold be used as money today? Explain how exchange rate equilibrium is set in the currency markets. Use any of the theories that we learned.

User Account

All Pages