QUESTION 10 Warning: To answer this question you may need to read the \"Market E

Question

QUESTION 10 Warning: To answer this question you may need to read the "Market Efficiency" section of Chapter 7 of Principles of Economics by N. Gregory Mankiw. I have made its PDF copy available on the course's web site at http://myweb.liu.edu/-uroy/eco41/Mankiw4e/Mankiw4e-chZ.pdf. See especially the discussion of Figure 8.) Consider a benevolent dictator who is in full control of the economy discussed in the two previous questions, and wishes to do what is in the nation's overall interest. Given the information in the last two questions, the amount of ice cream produced under the dictator's orders would be: a. 65 units. This is because consumers' benefits exceed producers' costs for the first 65 units, whereas benefits are less than costs for the O b. More than 65 units. This is because consumers' benefits exceed producers' costs for the 66th unit. O C. More than 65 units. This is because consumers" benefits are less than producers' costs for the 66th unit. d. Less than 65 units. This is because consumers benefits exceed producers' costs for the 64th unit. 66th and subsequent units. eLess than 65 units. This is because consumers' benefits are less than producers' costs for the 64th unit.

Explanation / Answer

Q10) we cannot answer this question.

Q11) (d) since cost to me of doing the job is 80 so i am willing to sell my services for 80. the difference between what I have actually received and what I am willing to receive is the producer surplus i.e. price - cost or 120 is the producer surplus.

Q12) as I have already mentioned that producer surplus is price minus cost. Show producer surplus here is zero because he will not produce the car for sale as the price is lower than the cost so show in case of no production the producer surplus will bzeroro

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