The graph below represents the market for lychee nuts. The equilibrium price is $7.00 per bushel, but the market price is $5.00 per bushel. Identify the areas representing consumer surplus, producer surplus, and deadweight loss at the equilibrium price
of $7.00 and at the market price of $5.00.
What will be an ideal response?
At the equilibrium price of $7.00:
Consumer surplus is represented by area A + B.
Producer surplus is represented by area C + D + E.
There is no deadweight loss.
At the market price of $5.00:
Consumer surplus is represented by area A + C.
Producer surplus is represented by area E.
Deadweight loss is represented by area B + D.
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Which of the following is not a resource?
a. Land. b. Labor. c. Money. d. Capital.
Governments invest in infrastructure to:
A. to increase the productivity of businesses. B. to spur economic growth. C. to increase the growth rate of GDP per capita. D. All of these are reasons why the government provides infrastructure.
Which of the following could be a direct cause of investment spending increasing?
A. The wealth of consumers increasing causing them to radically increase their purchases. B. Interest rates increase. C. A firms costs unexpectedly drop making their profit margin higher. D. Expected future income decreases.
The longer one has to wait for a future payment, the greater the present value it has.
Answer the following statement true (T) or false (F)