Question Details

Consider the following demand schedule for umbrellas at a local store: Price Quantity demanded per day $20 0 $18 5 $16 10 $14 15 $12 20 $10 25 a.Draw...


1.Consider the following demand schedule for umbrellas at a local store:

 

Price Quantity demanded per day
$20 0
$18 5
$16 10
$14 15
$12 20
$10 25

a.Draw the demand curve for umbrellas. Be sure to label the axes.

b.Suppose the price of umbrellas is $14. Indicate the area of market consumer surplus in your graph. Also indicate the area that represents the total amount that consumers spend on umbrellas.

c.Next, assume that Rebecca is willing to pay a maximum of $18 for an umbrella. What is Rebecca’s consumer surplus if she purchases an umbrella? Show her consumer surplus on your graph.

d.Another consumer, Andy, is willing to pay a maximum of $10 for an umbrella. What is his consumer surplus in this market?

e.If the demand schedule above represents demand on a normal summer day, what would you expect to happen to market consumer surplus if the forecast is for a heavy rainfall? Assume that the store does not raise its price. Draw a graph to support your answer.



3.Consider the following supply schedule for apartments in a local market.

 

Rent (per month) Quantity of apartments supplied
$800 100
$700 80
$600 60
$500 40
$400 20
$300 0

a.Draw the supply curve for apartments. Be sure to label the axes.

b.Suppose the going rental price for apartments is $550 per month. How many apartments will be supplied? (Assume the supply curve is a straight line between the points in the table above.)

c.Indicate the area of market producer surplus in your graph. Also indicate the area that represents the total cost of supplying apartments.

d.Next, assume that a particular landlord is willing to supply an apartment only if the rental price is at least $450 per month. What is her producer surplus in this market? Use a graph to support your answer.

e.Suppose that the price for condominiums in the area increases. This creates an incentive for apartment owners to sell their apartments as condominiums, thus removing them from the rental market. What would you expect to happen to producer surplus in the apartment market as a result of this change? Draw a graph to support your answer.


6.Consider the market for electricity. Suppose that the price of producing energy decreases due to lower fuel costs.

a.How does the decrease in electricity production costs affect total net social welfare? Use a graph to support your answer and indicate the area that represents the change in social welfare.

b.Can we clearly say what happens to consumer surplus as a result of the decrease in energy production costs? Use a graph to support your answer.


Chart Title

 

$900

 

$800

 

$700

 

$600

 

$500

 

$400

 

$300

 

$200

 

$100

 

$0 0 20 40 60 80 100 120 $25 $20 $15 $10 $5 $0 0 5 10 15 20 25 30

 


Solution details:

Pay using PayPal (No PayPal account Required) or your credit card . All your purchases are securely protected by .
SiteLock

About this Question

STATUS

Answered

QUALITY

Approved

DATE ANSWERED

Oct 15, 2019

EXPERT

Tutor

ANSWER RATING

YES, THIS IS LEGAL

We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.

You can also use these solutions:

  • As a reference for in-depth understanding of the subject.
  • As a source of ideas / reasoning for your own research (if properly referenced)
  • For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).
This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student.

NEW ASSIGNMENT HELP?

Order New Solution. Quick Turnaround

Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.

WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN A DEADLINE.

Order Now