Consumer and Producer Surplus Practice
Question # 00579452
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Updated on: 08/28/2017 05:02 AM Due on: 08/28/2017
Maximizing Total Welfare to Society
Consumer and Producer Surplus Practice:
1. Using the graph below, calculate the consumer and producer surplus at the competitive
equilibrium. Show your work.
Price
$100
S $40 D
0 100 Quantity 200 Consumer Surplus = ______________ Show work here: Producer Surplus = ______________ Show work here: Total Net Benefit to Society = ___________________ 2. At a price of $45, consumers will buy 3 bouquets of flowers and suppliers will sell 3 bouquets for
Valentine’s day.
Price Suppliers are
Willing to Accept
$25
$30
$45
$55
$60 Bouquet of Flowers
1st
2nd
3rd
4th
5th Price Consumers are
Willing to Pay
$60
$55
$45
$30
$25 a. What is the consumer surplus for the 2 nd bouquet of flowers? $___________
b. What is the total consumer surplus for all 3 bouquets of flowers? $ __________
c. Based on the market price, if consumers are willing to pay $30 for the 4 th bouquet of flowers,
should they buy that unit at the current market price? _______ Why or Why not? (How would
total consumer surplus be impacted?)
d. What is the producer surplus for the 1st bouquet of flowers? $ ____________ Maximizing Total Welfare to Society
e. What is the total producer surplus for all 3 bouquets of flowers? $___________
f. Based on the market price, if producers are willing to sell the 4 th bouquet of flowers for $55,
should they offer that unit up for sell at the current market price? __________ Why or Why not?
(How would total producer surplus be impacted?)
g. In general, will producing and consuming beyond the market equilibrium (where MB = P and MC
= P, so MB = MC) result in an increase or decrease in total net benefit (sum of consumer and
producer surpluses) to society? Explain.
h. What will happen to total net benefit (the sum of producer and consumer surpluses) if
consumers and producers only bought and sold 1 bouquet of flowers at the market price of $45?
Consumer and Producer Surplus Practice:
1. Using the graph below, calculate the consumer and producer surplus at the competitive
equilibrium. Show your work.
Price
$100
S $40 D
0 100 Quantity 200 Consumer Surplus = ______________ Show work here: Producer Surplus = ______________ Show work here: Total Net Benefit to Society = ___________________ 2. At a price of $45, consumers will buy 3 bouquets of flowers and suppliers will sell 3 bouquets for
Valentine’s day.
Price Suppliers are
Willing to Accept
$25
$30
$45
$55
$60 Bouquet of Flowers
1st
2nd
3rd
4th
5th Price Consumers are
Willing to Pay
$60
$55
$45
$30
$25 a. What is the consumer surplus for the 2 nd bouquet of flowers? $___________
b. What is the total consumer surplus for all 3 bouquets of flowers? $ __________
c. Based on the market price, if consumers are willing to pay $30 for the 4 th bouquet of flowers,
should they buy that unit at the current market price? _______ Why or Why not? (How would
total consumer surplus be impacted?)
d. What is the producer surplus for the 1st bouquet of flowers? $ ____________ Maximizing Total Welfare to Society
e. What is the total producer surplus for all 3 bouquets of flowers? $___________
f. Based on the market price, if producers are willing to sell the 4 th bouquet of flowers for $55,
should they offer that unit up for sell at the current market price? __________ Why or Why not?
(How would total producer surplus be impacted?)
g. In general, will producing and consuming beyond the market equilibrium (where MB = P and MC
= P, so MB = MC) result in an increase or decrease in total net benefit (sum of consumer and
producer surpluses) to society? Explain.
h. What will happen to total net benefit (the sum of producer and consumer surpluses) if
consumers and producers only bought and sold 1 bouquet of flowers at the market price of $45?
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Solution: Consumer and Producer Surplus Practice