Share
Explore BrainMass

deadweight loss to the consumers

Broomsticks are manufactured by 2 firms which constitute a competitive industry. Neither firm has any fixed costs. There are two consumers, Jack and Enis. Consider the following information.

Total Cost Total Value
Quantity Firm BB Firm MT Jack Enis

1 $ 2 $ 10 $10 $37
2 3 19 7 5
3 4 26 6 4
4 5 32 2 1

1. What quantity of broomsticks are sold and at what price? How many are produced by firm BB and how many by firm MT ? How many are bought by Jack ? How many bought by Enis ?

2. In numbers, how much producers' surplus is gained in this market? How much consumers' surplus ? How much social surplus ?

3. Suppose BB and MT form a single (noncompetitive) firm, and that this does not affect costs. How many broomsticks are sold, and at what price ?

4. In numbers, what is the size of the deadweight loss from the above action ?

5. You should provide a graph that demonstrates your answers.

Attachments

Solution Summary

Determine size of the deadweight loss and other traits.

$2.19