Figures 5.4a and 5.4b . Q 1 5 20 bags. Q 2 5 15 bags. Q 3 5 27 bags. The market

Question

Figures 5.4a and 5.4b . Q 1 5 20 bags. Q 2 5 15 bags. Q 3 5 27
bags. The market equilibrium price is $45 per bag. The
price at a is $85 per bag. The price at c is $5 per bag. The
price at f is $59 per bag. The price at g is $31 per bag. Apply
the formula for the area of a triangle (Area 5 ½ 3 Base 3
Height) to answer the following questions. LO2




c. What is the dollar value of the deadweight loss when
output level Q 3 is produced? What is the dollar value of
the total surplus when output level Q 3 is produced?

Explanation / Answer

In this case, we use the formula to calculate PS and CS and TS is the sum of these PS=1/2(85-45)(27-20)=140 CS=1/2(45-5)(20-15)=100 TS=100+140=240 Hope this helps

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