Purchase Solution

Consumers' surplus

Not what you're looking for?

Ask Custom Question

Please see the attached file.

---
Suppose that in the domestic market for com¬puter chips the demand is pd = 110 - Qd, where Qd is the number of units of chips demanded domestically when the price is pd. The domestic supply is ps = 10 + QS, where QS is the number of units of chips supplied domestically when domestic suppliers receive a price ps. Foreign suppliers would be willing to supply any number of chips at a price of $30. The government is contemplating three possible policies:
Policy I: The government decides to ban imports of chips.
Policy II: Foreign suppliers are allowed to import chips (with no tariff).
Policy III: The government allows imports, but imposes a tariff of $10 per unit.
Fill in the table in Figure 10.20, giving numerical answers.

(see attached file for chart)

How many units of chips would be consumed domestically?
How many units of chips would be produced domestically?
What is the size of domestic producer surplus?
What is the size of consumer surplus?
What is the size of government receipts?

FIGURE 10.20 Government Policies for Computer Chip Imports

Also: repeat your analysis for Policy IV, in which the domestic government does not impose a tariff on foreign suppliers, but it imposes a quota limiting imports to no more than 20 units of chips.

For each case (policies I, II, III, and IV), show your work and illustrate your analysis with a diagram.
---

Attachments
Purchase this Solution
Solution Summary

Consumers' surplus is examined.

Purchase this Solution
Free BrainMass Quizzes
Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

View More Free Quizzes
Related BrainMass Solutions

  • Economics - Supply, Demand and Surplus

    If sellers can raise the price, can they transfer some of the consumers' surplus to themselves? They can, and the graph below illustrates what happens. The consumers' surplus at price Pc is A+B+D. The producers' surplus at this price is C+E.

  • Calculating Consumer Surplus

    229474 Consumer Surplus The demand curve for product X is given by Qdx = 460 - 4Px a) How much consumer surplus do consumers receive when Px = $35? b) How much consumer surplus do consumers receive when Px = $25?

  • Mathematics - Calculus - Consumer's Surplus

    Find the price p0 = D(q0) at which q0 units will be demanded and compute the corresponding consumers' surplus CS. Sketch the demand curve y = D(q) and shade the region whose area represents the consumers' surplus.

  • What is the inverse demand function and consumer surplus?

    c) How much consumer surplus do consumers receive when Px = $25? d) In general, what happens to the level of consumer surplus as the price of goods falls?

  • Price as a tool for surplus in microeconomics

    So consumers that can buy the product now at the lower price now experience a consumer surplus (even though there are other consumers who would like to purchase the product but cannot because of the supply decrease and thus they experience a loss of consumer

  • Perfectly Competitive, Monopoly

    Thus, the consumers' surplus is the area A. Therefore, consumers are worse off in this market. Depict consumers' surplus when the market is perfectly competitive.

  • Why monopolies occur, and why they are undesirable

    If you've gone over the concepts of consumers and producers surplus, welfare is measured as the sum of consumers surplus and producers surplus.

  • Consumer surplus analysis

    The surpluses for the other three consumers will also increase by $10 each, for an additional $30. This gives us a total surplus of $37 + 21 = $58. c.

  • Elasticity and Inelasticity

    Consumer surplus is the difference between the total amount the consumers are willing to pay and the actual amount they pay for a product.

  • Taxes and How They Affect Surplus

    The consumer and producer surpluses are the monetary values that consumers and producers receive from transactions. Consumer surplus occurs when consumers buy goods for less than the highest value than they would be willing to pay.

View More Related Solutions