1. If price is lowered by law from the market equilibrium value of $5 to a lower value of $4: - producer surplus will decrease and there will be some total surplus lost. - consumer surplus will decrease and there will be some total surplus lost. - there will be lost surplus, as both producer surplus and consumer surplus decrease. - both producer surplus and consumer surplus will increase. 2. If price is lowered by law from the market equilibrium value of $5 to a lower value of $4: - producer surplus will decrease and there will be some total surplus lost. - consumer surplus will decrease and there will be some total surplus lost. - there will be lost surplus, as both producer surplus and consumer surplus decrease. - both producer surplus and consumer surplus will increase.
Added by Richard C.
Close
Step 1
Step 1: When the price is lowered by law from the market equilibrium value of $5 to a lower value of $4, the quantity demanded will increase and the quantity supplied will decrease. Show more…
Show all steps
Your feedback will help us improve your experience
Adi S and 69 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
HW-31-Consumer-Producer-Surplus Section 5.1: Problem 4 D(x) is the price, in dollars per unit, that consumers are willing to pay for x units of an item, and S(x) is the price, in dollars per unit, that producers are willing to accept for x units. D(x) = 144 - x^2 and S(x) = x^2 + 2x. (A) Find the market equilibrium point (Q, P). (Q, P) = ( (B) Find consumer's surplus at the market equilibrium point. Consumer's surplus: (C) Find the producer's surplus at the market equilibrium point. Producer's surplus: (Round to three decimal places as needed. Note: You can earn partial credit on this problem. You have attempted this problem 0 times. You have 6 attempts remaining.
Adi S.
As the price of a product increases, businesses usually increase the quantity manufactured. However, as the price increases, consumer demand-or the quantity of the product purchased by consumers-usually decreases. The price we see in the market place occurs when the quantity supplied and the quantity demanded are equal. This price is called the equilibrium price and this demand is called the equilibrium demand. The supply of a certain product is related to its price by the equation $p=\frac{1}{3} q,$ where $p$ is in dollars and $q$ is the quantity supplied in hundreds of units. (a) If this product sells for 9 dollars, what quantity will be supplied by the manufacturer? (b) Suppose that consumer demand for the same product decreases as price increases according to the equation $p=20-\frac{1}{5} q .$ If this product sells for 9 dollars, what quantity will consumers purchase? How does this compare with the quantity being supplied by the manufacturer at this price? (c) On the basis of parts (a) and (b), what should happen to the price? Explain. (d) Determine the equilibrium price at which the quantity supplied and quantity demanded are equal. What is the demand at this price?
Systems and Matrices
Systems of Equations
Akash M.
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
Watch the video solution with this free unlock.
EMAIL
PASSWORD