(1 point) Note: This problem is similar to problems 1 and 8 in section 6.2 (pages 284-5). Supply and demand curves for a product appear in the graph below. The supply curve is the green curve. The demand curve is the red curve. (NOTE: You may click on the figure below to obtain a larger graph.)
Equilibrium price = 40
Equilibrium quantity = 110
Estimate the consumer surplus = 1650
Estimate the producer surplus = 660
Estimate the total gains from trade for this product = 2310
Estimate what quantity would be sold and what the consumer surplus, producer surplus, and total gains would be IF an artificial price of $ 4 were imposed.
Estimated quantify sold for an artificial price of $ 60:
Estimated consumer surplus for an artificial price of $ 60:
Estimated producer surplus for an artificial price of $ 60:
Estimated total gain for an artificial price of $ 60:
To estimate the quantity sold, consumer surplus, producer surplus, and total gain for an artificial price of $60, we need to understand the supply and demand curves.
In a market, the equilibrium price and quantity occur where the supply and demand curves intersect. In this case, the equilibrium price is $40, and the equilibrium quantity is 110.
To estimate the quantity sold for an artificial price of $60, we need to determine whether it falls above or below the equilibrium price. Since $60 is higher than the equilibrium price of $40, it means the price is above the equilibrium.
The quantity sold for an artificial price above the equilibrium price is determined by the quantity supplied and demanded at that price. To find this, we need to check the point where the demand and supply curves intersect the price line of $60.
Next, find the quantity supplied at the price of $60 by looking at the supply curve. Estimate the value based on the graph provided. Similarly, find the quantity demanded at the price of $60 by looking at the demand curve and estimating the value.
To estimate the consumer surplus for an artificial price of $60, subtract the estimated price from the equilibrium price ($40) and multiply the difference by the estimated quantity demanded. This reflects the additional value that consumers receive by paying less for the product.
To estimate the producer surplus, subtract the estimated price from the equilibrium price ($40) and multiply the difference by the estimated quantity supplied. This reflects the additional profit that producers receive by selling the product at a higher price.
To estimate the total gain for an artificial price of $60, add the consumer surplus and producer surplus together. This represents the total benefit gained by both consumers and producers in the market.
Please provide the estimated quantity sold, consumer surplus, producer surplus, and total gain for an artificial price of $60, and I can assist you further.