Economic Surplus = Consumer Surplus + Produce Surplus Figure 1 1) In Figure 1, label the vertical & horizontal axes and

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Economic Surplus Consumer Surplus Produce Surplus Figure 1 1 In Figure 1 Label The Vertical Horizontal Axes And 1 (617.51 KiB) Viewed 26 times

Economic Surplus = Consumer Surplus + Produce Surplus Figure 1 1) In Figure 1, label the vertical & horizontal axes and label the demand curve and the supply curve appropriately. 2) What is the equilibrium outcome given the supply curve and demand curve in the diagram to the left? 25 20 15 10 5 0 Figure 2 25 20 15 10 5 0 0 0 Supply & Demand 5 10 Supply & Demand 5 10 15 15 20 20 3) What is the total revenue for producers generated given this equilibrium? What is the total expenditure by consumers? 4) What is the highest price that a buyer would pay to purchase the first unit of this good? (Buyer's reservation price) 5) What is the lowest price that a seller would accept to sell the first unit of this good? (Seller's reservation price) 6) Define "consumer surplus." See Section 3.5 in the Greenlaw & Shapiro textbook. 7) Define "producer surplus." 8) Calculate the "consumer surplus" (CS): CS = (Buyer's reservation price-actual price) X actual quantity) 9) Calculate the "Producer surplus" (PS): PS = (Actual price - seller's reservation price) X actual quantity) 10) Calculate the "Economic surplus" (ES): EC = CS + PS 1) In Figure 2, label the vertical & horizontal axes and label the demand curve and the supply curve appropriately. 2) Input price rises for the production of the good and the supply curves shifts from "orange" to "grey." Is that a supply increase or a supply decrease? 3) What is the equilibrium outcome given the shifted supply curve and demand curve in the diagram to the left? 4) What is the total revenue for producers generated given this equilibrium? What is the total expenditure by consumers? Given the new equilibrium, calculate the consumer surplus. 5) 6) 7) 8) Given the new equilibrium, calculate the producer surplus. Given the new equilibrium, calculate the economic surplus. Compare the consumer surplus, producer surplus, and economic surplus for Figure 2 with those values for Figure 1. Report & explain.