Problems and Applications
1. If an early freeze in California sours the lemon crop, the supply curve for lemons shifts to the left, as shown in Figure 7-5. The result is a ri in the price of lemons and a decline in consumer surplus from A + B + C to just A. So consumer surplus declines by the amount B + C.
Figure 7-5
In the market for lemonade, the higher cost of lemons reduces the supply of lemonade, as shown in Figure 7-6. The result is a ri in the price of lemonade and a decline in consumer surplus from D + E + F to just D, a loss of E + F. Note that an event that affects consumer surplus in one market often has effects on consumer surplus in other markets.
Figure 7-6
2. A ri in the demand for French bread leads to an increa in producer surplus in the market for
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French bread, as shown in Figure 7-7. The shift of the demand curve leads to an incread price, which increas producer surplus from area A to area A + B + C.
Figure 7-7
The incread quantity of French bread being sold increas the demand for flour, as shown in Figure 7-8. As a result, the price of flour ris, increasing producer surplus from area D to D + E + F. Note that an event that affects producer surplus in one market leads to effects on producer surplus in related markets.
Figure 7-8
3. a. Bert’s demand schedule is:
Price日久见人心的英文 | Quantity Demanded |
More than $7 | 0 |
$5 to $7 | 1 |
$3 to $5 | 2 |
$1 to $3 | 3receive的用法 |
$1 or less | 4 |
rpt | |
relationalBert’s demand curve is shown in Figure 7-9.
Figure 7-9needyounow歌词
临时翻译
b. When the price of a bottle of water is $4, Bert buys two bottles of water. His consumer surplus is shown as area A in the figure. He values his first bottle of water at $7, but pays only $4 for it, so has consumer surplus of $3. He values his cond bottle of water at $5, but pays only $4 for it, so has consumer surplus of $1. Thus Bert’s total consumer surplus is $3 + $1 = $4, which is the area of A in the figure.
c. When the price of a bottle of water falls from $4 to $2, Bert buys three bottles of water, an increa of one. His consumer surplus consists of both areas A and B in the figure, an increa in the amount of area B. He gets consumer surplus of $5 from the first bottle ($7 value minus $2 price), $3 from the cond bottle ($5 value minus $2 price), and $1 from the third bottle ($3 value minus $2 price), for a total consumer surplus of $9. Thus consumer surplus ris by $5 (which is the size of area B) when the price of a bottle of water falls from $4 to $2.
4. a. Ernie’s supply schedule for water is:
Price | Quantity Supplied |
More than $7 | 4 |
voice of china$5 to $7 | 3 |
$3 to $5 | 2 |
$1 to $3 | 1 |
Less than $1 | 乐观英文0 |
| |
Ernie’s supply curve is shown in Figure 7-10.
Figure 7-10
b. When the price of a bottle of water is $4, Ernie lls two bottles of water. His producer surplus is shown as area A in the figure. He receives $4 for his first bottle of water, but it costs only $1 to produce, so Ernie has producer surplus of $3. He also receives $4 for his cond bottle of water, which costs $3 to produce, so he has producer surplus of $1. Thus Ernie’s total producer surplus is $3 + $1 = $4, which is the area of A in the figure.
c. When the price of a bottle of water ris from $4 to $6, Ernie lls three bottles of water, an increa of one. His producer surplus consists of both areas A and B in the figure, an increa by the amount of area B. He gets producer surplus of $5 from the first bottle ($6 price minus $1 cost), $3 from the cond bottle ($6 price minus $3 cost), and $1 from the third bottle ($6 price minus $5 price), for a total producer surplus of $9. Thus producer surplus ris by $5 (which is the size of area B) when the price of a bottle of water ris from $4 to $6.
5. a. From Ernie’s supply schedule and Bert’s demand schedule, the quantity demanded and supplied are:
Price | Quantity Supplied | Quantity Demanded |
$ 2 | 1 | 3 |
4 | 2 | 2返老还童剧情 |
6 | 3 | 1 |
| | |
Only a price of $4 brings supply and demand into equilibrium, with an equilibrium quantity of 2.
b. At a price of $4, consumer surplus is $4 and producer surplus is $4, as shown in problems 3 and 4. Total surplus is $4 + $4 = $8.
c. If Ernie produced one fewer bottle, his producer surplus would decline to $3, as shown in problem 4. If Bert consumed one fewer bottle, his consumer surplus would decline to $3, as shown in problem 3. So total surplus would decline to $3 + $3 = $6.
d. If Ernie produced one additional bottle of water, his cost would be $5, but the price is only $4, so his producer surplus would decline by $1. If Bert consumed one additional bottle of water, his value would be $3, but the price is $4, so his consumer surplus would decline by $1. So total surplus declines by $1 + $1 = $2.
6. a. The effect of falling production costs in the market for stereos results in a shift to the right in the supply curve, as shown in Figure 7-11. As a result, the equilibrium price of stereos declines and the equilibrium quantity increas.
