How to calculate each of the question and some explaination
Chapter 6 . Efficiency and Fairness of Markets 1 07 ADDITIONAL EXERCISES FOR ASSIGNMENT Questions Checkpoint 6.2 Value, Price, and Consumer Surplus 1. Figure 6.1 shows the demand for soft drinks. FIGURE 6.1 Use the figure to answer the following ques- Additional Exercise I tions: la. What is the value of the 30th can of soft Price (dollars per can) drink? 1b. What is the willingness to pay for the 10th can 2.50- of soft drink? lc. What is the consumer surplus on the 10th can 2.00 of soft drink if the price is 50c a can? 1d. What are the quantity of soft drinks bought 1.50 and the consumer surplus if the price is 50p 1.00 per can? le. What is the total amount paid for the soft 0.50 drinks in question (d)? If. What is the total benefit from the soft drinks bought in question (d)? 10 30 30 1g. If the price of a soft drink rises to $1.00 a can, Quantity (cara per day) what is the change in the consumer surplus? Checkpoint 6.3 Cost, Price, and Producer Surplus 2. Figure 6.2 shows the supply of soft drinks. FIGURE 6.1 Use the figure to answer the following ques- Additional Exercise 2 tions: 2a. What is the marginal cost of the 30th can of Price (dollars per can) soft drink? 2b. What is the minimum supply price of the 10th 2.50 can of soft drink? 2c. What is the producer surplus on the 10th can 2.00 of soft drink if the price is $1.50 a can? 150 -mmm 2d. What are the quantity of soft drinks produced and the producer surplus if the price is $1.50 1.00 a can? 2e. What is the total revenue from the soft drinks 050 sold in question (d)? 2f. What is the cost of producing the soft drinks 10 20 30 sold in question (d)? Quantity (cara per day) 2g. If the price of a soft drink falls to $1.00 a can, what is the change in the producer surplus? 2021 Pearson Education, Inc.108 Part 2 . A CLOSER LOOK AT MARKETS Checkpoint 6.4 Are Markets Efficient? 3. Figure 6.3 shows the market for soft drinks. FIGURE 6.3 Use the figure to answer the following ques- Additional Exercise 3 tions: 3a. What are the equilibrium price and equilibria Price (dollars per can) um quantity of soft drinks? 2.00 3b. In market equilibrium, what is the consumer 1.75 surplus? 1.50 3c. In market equilibrium, what is the producer 1.35 surplus? 3d. Is the market for soft drinks efficient? Why? 1.00. Be. If the government restricted producers to 10 0.75 cans of soft drinks a day, would the market 0.50 for soft drinks be efficient? Why? 3f. In the situation described in part (e), what is 0.25 the deadweight loss? in ! 10 15 20 3g. If the government passed a law requiring Quantity (cara per day) producers of soft drinks to sell 20 cans a day, would the market for soft drinks be efficient? Why or why not? 3h. In the situation described in part (g), what is the deadweight loss? 4. Figure 6.4 shows the market for carnations. In FIGURE 6.4 recent years, the U.S. government has re- Additional Exercise 4 moved a quantity regulation (a quota) on im- ported carnations. Suppose that in 1990, the Price (dollars per ton) United States only allowed florists to import 30 tons of carnations each week. As a result, 500 the supply curve of carnations to the United States, which is not the same as the "sup- 100 S=MC ply=marginal cost" curve, was vertical at 30 tons. The price at that time was $400 a ton of carnations. Today, the regulations have been D=MB removed and florists now import 60 tons of 200 carnations and the price is $300 a ton of carna- 100 tions. 4a. What were the producer and consumer sur- plus while the quantity regulation was in ef- 10 20 30 40 60 70 80 fect? What was the deadweight loss? Carnations (toma per week) 4b. What is the producer and consumer surplus now that the regulation has been removed? 4c. Which outcome is efficient, with the regulation or without
