Economics - Supply, Demand and Surplus
Not what you're looking for?
Illustrate Producer and Consumer surplus with Supply and Demand Curves. Also a) Find the equilibrium price (where supply equals demand) b) Find the consumer's surplus and the producer's surplus at equilibrium by solving an Illustration.
Purchase this Solution
Solution Summary
The supply, demand and surplus is determined. The expert finds the equilibrium price and consumer's surplus. A complete, neat and step-by-step solution is provided in the attached file.
Solution Preview
Producer And Consumer Surplus
The producers' and consumers' surpluses are illustrated with supply and demand curves in the figure below. The total value to consumers of quantity Q is represented by areas A+B+C. Because the consumers must pay B+C, only the area A is surplus for them. Producers get revenue of B+C. B is their surplus because only payments of C are needed to attract the resources necessary to produce quantity Q.
The concepts of consumers' and producers' surpluses are tools that can help analyze many situations. For example, is there any temptation for sellers to gang up on buyers? 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. By raising price to Pm, sellers cause the consumers' surplus ...
Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.