Intermediate Microeconomics · free preview
Producers' Surplus and Total Surplus
Producers' surplus is the area above supply below price, total surplus the sum of the two triangles, and competitive equilibrium maximizes it, the benchmark against which every tax, subsidy, and rationing scheme is measured.
1. The supply side's surplus
The supply side's surplus
2. Equilibrium maximizes the total
Equilibrium maximizes the total
3. Rationing and controls
Rationing and controls
4. Benefit-cost in one picture
Benefit-cost in one picture
5. Producers' surplus
Supply P equals Q over 10 and price 5. What is producers' surplus?
6. The ceiling's arithmetic
A price ceiling at 3 on this market. What happens to quantity and to total surplus?
7. Misallocation under rationing
Under the ceiling at 3, why does surplus fall more than the triangle if allocation is random?
8. What equilibrium maximizes
In what precise sense does the competitive equilibrium maximize welfare here?
9. Deadweight of a floor
A price floor at 7 on this market, compute the deadweight loss, and write the number.
10. Total surplus at equilibrium
Compute total surplus at the competitive equilibrium, and write the number.
11. The ceiling's deadweight loss
A price ceiling of 3 on this market with supply P equals Q over 10 and demand P equals 10 minus Q over 10. What is the deadweight loss under efficient rationing?
12. Producers under the floor
With a price floor of 7, thirty units trade. What is producers' surplus?
13. Consumers at the free equilibrium
At the competitive equilibrium with P of 5 and Q of 50, what is consumer surplus?
14. Total surplus under the ceiling
Under the ceiling of 3 with efficient rationing, how does total surplus compare to the equilibrium's 250?
15. Producers' surplus under the floor
With the price floor of 7 and thirty units traded, compute producers' surplus, and write the number.
16. Consumer surplus under the ceiling
Under the ceiling of 3 with efficient rationing and thirty units traded, compute consumer surplus, and write the number.
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