Consumer and Producer Surplus 1 . How can we tell that markets are efficient? 2. When are markets inefficient? 3. Do you agree with the argument that markets impede equitable distribution? Why ? 4. How do different changes affect "welfare"? 5 . Calculate the value of producer surplus, consumer surplus and total surplus on each of the following scenarios: a. Equilibrium price is $5, Equilibrium quantity is 12,000 units. No units are produced at $3 and no units are purchased at $12. Show your work. i . Producer surplus: fi. Consumer surplus ifi. Total surplus: b. Equilibrium price is $20, equilibrium quantity is 10,000 units. No units are produced at $10, no units are consumed at $30. Show your work. i. Producer surplus:li. Consumer surplus: ifi. Total surplus: C. Equilibrium price is $20, equilibrium quantity is 5,000 units. No units are produced at $10, no units are consumed at $40. Show your work. i . Producer surplus: li. Consumer surplus: iii. Total surplus: 6. Explain, either through words or graphs, how purely competitive markets create a socially beneficial outcome. How does interfering with the market mechanisms make society worse off? 7. How do purely competitive markets create the lowest possible consumer price and the greatest amount of product possible?