Assume the following values for Figures 5.4a and 5.4b. Q1=20 bags. Q2=15 bags. Q
ID: 1255234 • Letter: A
Question
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?
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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