Answer the following questions based on the graph that represents Shack. At the

Question

Answer the following questions based on the graph that represents Shack. At the equilibrium price, how many ribs would J.R. be willing to purchase? How much is J.R. willing to pay for 20 ribs? What is the magnitude of J.R's consumer surplus at the equilibrium price> d. How high must the price of ribs be for Judy to supply 20 ribs to the market? e. At the equilibrium price, what is the magnitude of total surplus in the market? f. If the price of ribs fell to $5, what would happen to Judy's producer surplus? g. Explain why the graph that is shown verifies the fact that the market equilibrium (quantity) maximizes the sum of producer and consumer surplus.

Explanation / Answer

(a) 40

(b) 10

(c) 40

(d) 5

(e) 80

(f) decrease by 20

(g) demand curve and supply curve intersect where the the consumer and producer surplus is maximum which occurs at 40 making it 80 beyond which or before which it is always less than 80

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