<p>advanced analysis Assume the following values for <span style=\"text-decorati
ID: 1229587 • Letter: #
Question
<p>advanced analysis Assume the following values for <span><span>Figures 5.4a</span></span> and <span><span>Figures 5.4b</span></span>. <em>Q</em><sub>1</sub> = 20 bags. <em>Q</em><sub>2</sub> = 15 bags. <em>Q</em><sub>3</sub> = 27 bags. The market equilibrium price is $45 per bag. The price at <em>a</em> is $85 per bag. The price at <em>c</em> is $5 per bag. The price at <em>f</em> is $59 per bag. The price at <em>g</em> is $31 per bag. Apply the formula for the area of a triangle (Area = ½ × Base × Height) to answer the following questions. <strong><span><span>LO2</span></span></strong></p><p><strong><span><span><br /></span></span>
<p>a.</p>
</strong></p>
<p>What is the dollar value of the total surplus (producer surplus plus consumer surplus) when the allocatively efficient output level is being produced? How large is the dollar value of the consumer surplus at that output level?</p>
<p><br /><strong>
<p>b.</p>
</strong></p>
<p>What is the dollar value of the deadweight loss when output level <em>Q</em><sub>2</sub> is being produced? What is the total surplus when output level <em>Q</em><sub>2</sub> is being produced?</p>
<p><br /><strong>
<p>c.</p>
</strong></p>
<p>What is the dollar value of the deadweight loss when output level <em>Q</em><sub>3</sub> is produced? What is the dollar value of the total surplus when output level <em>Q</em><sub>3</sub> is produced?</p>
<p><br /><br /></p>
Explanation / Answer
Assume the following values for Figures 5.4a and 5.4b. Q1=20 bags. Q2=15 bags. Q3=27 bags. The market equilibrium price is $45 per beg. The price at a is $85 per bag. The price at c is $5 a 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=1/2 XBase X Height to answer the following question. what is the value of the dead weight loss when output level Q2 is being produced? what is the total surplus when output level Q2 is being produced? cs =1/2 (20-0) (85-45) =400 ps=1/2 (20-0) (45-5) =400 ps+cs=ts=800
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