Question

Consider a market with a perfectly vertical demand curve, and a perfectly horizontal supply curve. Calculate...

Consider a market with a perfectly vertical demand curve, and a perfectly horizontal supply curve. Calculate the consumer surplus, and the producer surplus, in this market.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Since the consumer surplus is the area below the demand curve and above the price. A it can be seen in the diagram that above the price and below the demand curve, the area is infinite. Hence the area of the consumer surplus will be infinite.

Producer surplus is the area below the price and above the supply curve, but price and supply curve is same. Hence there is no area between price and supply curve.

Hence the producer surplus is 0.

Total surplus= CS+PS

=infinitity +0

=Infinity

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider a market with a perfectly elastic demand curve at p∗ = 1,763 and a perfectly...
Consider a market with a perfectly elastic demand curve at p∗ = 1,763 and a perfectly inelastic supply curve at q∗ = 452. What is the Consumer Surplus? What is the Producer Surplus?
Consider a market with a perfectly elastic demand curve at p∗ = 1,763 and a perfectly...
Consider a market with a perfectly elastic demand curve at p∗ = 1,763 and a perfectly inelastic supply curve at q∗ = 452. What is the Consumer Surplus? What is the Producer Surplus? (15%)
The market for apples is perfectly competitive, with the market supply curve is given by P...
The market for apples is perfectly competitive, with the market supply curve is given by P = 1/8Q and the market demand curve is given by P = 40 – 1/2Q. a. Find the equilibrium price and quantity, and calculate the resulting consumer surplus and producer surplus. Indicate the consumer surplus and producer surplus on the demand and supply diagram. b. Suppose the government imposes a 10 dollars of sale tax on the consumer. What will the new market price...
Consider a perfectly competitive market with Market demand function: ?? = 1000 − 2? Market supply...
Consider a perfectly competitive market with Market demand function: ?? = 1000 − 2? Market supply function: ?? = 2? a. Suppose there is no sales tax. What is the equilibrium price and equilibrium quantity? What is the consumer surplus and producer surplus? b. Now suppose the government imposes a sales tax of $50 per unit on consumers. What is the new equilibrium price and equilibrium quantity? What is the new consumer surplus and producer surplus? What is the tax...
Consider a perfectly competitive market with demand Q=1,000-4P. The marginal cost for each firm in the...
Consider a perfectly competitive market with demand Q=1,000-4P. The marginal cost for each firm in the market is constant at MC=4. Determine the competitive equilibrium price and quantity. . Graph demand, supply, and the equilibrium found in part A). Determine consumer surplus, producer surplus, and total surplus. Is consumer surplus or producer surplus equal to zero? Why or why not? Is this question representative of a long or short-run perfectly competitive market? How do you know?
Suppose a perfectly competitive market has the following inverse supply and demand curves: Supply: P= 5+2Q...
Suppose a perfectly competitive market has the following inverse supply and demand curves: Supply: P= 5+2Q Demand: P = 50-Q. 1) Solve for the perfectly competitive Pe and Qe, and calculate consumer+producer surplus at Pe, Qe.
Consider a perfectly competitive market where the market demand curve is given by Q = 76−8P...
Consider a perfectly competitive market where the market demand curve is given by Q = 76−8P and the market supply curve is given by Q=−8+4P. In the situations (e), determine the following items (i-viii) (e) A market with price floor F = 6. i) The quantity sold in the market. ii) The price that consumers pay (before all taxes/subsidies). iii) The price that producers receive (after all taxes/subsidies). iv) The range of possible consumer surplus values. v) The range of...
2. Consider a perfectly competitive market with market supply Qs=-2+P and market demand Qd = 30-P....
2. Consider a perfectly competitive market with market supply Qs=-2+P and market demand Qd = 30-P. What is consumer surplus in this market?
Suppose that the market for milk is initially perfectly competitive. a) Draw a supply and demand...
Suppose that the market for milk is initially perfectly competitive. a) Draw a supply and demand diagram showing the equilibrium quantity of milk produced and the market price. Be sure to label all part of your diagram. b) On your diagram from Part (a), label the consumer and producer surplus. c) Suppose that the government permits an industry association to form which issues production quotas to each dairy farmer. If the sum of the quotas are less than competitive market...
on a supply-and-demand diagram, consider a price for which the horizontal distance to the demand curve...
on a supply-and-demand diagram, consider a price for which the horizontal distance to the demand curve exceeds the horizontal distance to the supply curve. there is a __________ at that price and the current price must be __________ the equilibrium price. A-Shortage, above B-Shortage, below C-Surplus, above D-Surplus, below
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT