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a Secure https://www.mathxl.com/Student/PlayerHomework aspx?homeworkid-485855543&questionld-1;&flushed-false;&icld-5039997;&centerwin-yes; ECONO 2202-Net03 Homework: Homework 3 Score: 0.25 of 1 pt 47 of 18 (17 complete) End of Chapter 1.9 HW Score: 89.17%, 26 Question A Wall Street Journal article noted that as manufacturers began to produce more 4K television sets, their production costs decined Market for 4K Televisions Source: Jack Wetherill and Brett Sappington, "Is Now the Time to Buy a 4K TV Set?" w Refer to the graph at right, and the shaded areas designated by letters A through N a. These falling costs result in a consumer surplus in the market for 4K televisions represented by ?. Sy Sy A. A, B, C, D, E, F, G. B. A, B, C, D. E, F. G, H. I C. A, B, C D. A, B, C, E b. These falling costs result in a loss of producer surplus equal to areas O A. F. G, H, B. D, E, F, G, H, I Quandty O C, G, H, 1. O D. D, F, G Click to select your answer and then click Check Answer Clear All 818AM /29/20182 Type here to search

Explanation / Answer

a.Producing more than 4K, Production cost declined.

Falling cost means increasing supply, Supply increases from S0 to SY

Consumer surplus is the difference between the amount that buyers are willing to pay and what they actually pay. This is given by the area above the equilibrium point and below the demand curve.

Earlier Consumer surplus was, A + B + C + E + D + F + G +E

And now the Consumer Surplus is, A + B + C + E + D + F + G +E + D + F + G+ H + I

Answer is B

b. Producer surplus is the difference in the price that the producer is willing to sell and the price at which he actually sells. It is given by the area, below the equilibrium point and above the supply curve.

Earlier the producer surplus was, D+F+G+J+N

Now the producer surplus is, J+K+L+M+N

So, the loss is DFG

Answer is option D.

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