Friday
April 25, 2014

Homework Help: Microeconomics-Consumer & Producer Suplus Graphs

Posted by G on Sunday, February 24, 2008 at 3:53pm.

Can anyone help? I am trying the draw the following graphs for Consumer & Producer Suplus. I have made several attempts and I know I am not drawing them right.

1) The cost of producing stereo systems has fallen over the past several decades.
A)Use a supply-and-demand diagram to
show the effects of falling
production costs on the price and
quantity of stereos sold.
B)In your diagram, show what happens
to conumer suplus and producer
surplus.
2) Suppose a technological advance reduces the cost of making computers. Assume that computers and adding machines are substitutes. Use a supply-and-demand diagram to show what happens to price, quantity, consumer suplus, and producers surplus in the market for adding mcahines. Should adding machine producers be happy or sad because of the technological advance in computers?

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