Consider a industry in which Bert from Problem 4 is the buyer and Ernie from Problem 5 is the seller.

a. Use Ernie’s supply schedule and also Bert’s demand schedule to discover the quantity supplied and amount demanded at prices of $2, $4, and $6. Which of these prices brings supply and also demand right into equilibrium?

b. What are customer excess, producer surplus, and complete excess in this equilibrium?

c. If Ernie created and Bert consumed one fewer bottle of water, what would certainly happen to total surplus?

d. If Ernie developed and Bert consumed one extra bottle of water, what would happen to complete surplus?




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Jul 10 2021 06:50 AM

1 Apverified Answer


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kandregula aanswered on July 12, 2021
5Ratings,(22 Votes)
Answer:

From the over table we have the right to check out that the quantity demanded amounts to to amount provided at aprice of $4_Therefore, $4 is the sector clearing price or equilibrium price. In addition, the amount demandedat this price is the equilibrium quantity.Thus, equilibrium price is $4 and also equilibrium quantity is two bottles At equilibrium consumer surplus and producer surplus are same. Hence, the consumer andproducer surplus would certainly be $4.Total surplus at equilibrium:Total excess is the amount ot total customer and also producer surpluses;Total excess = Total Consumer Surplus + Total Producer Surplus = $4+$4

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