A number of domestic and foreign manufacturers produce replacement parts and components for personal computer systems. With exacting user specifications, products are standardized and price competition is brutal. To illustrate the net amount of social welfare generated in this hotly competitive market, assume that market supply and demand conditions for replacement tower cases can be described as:
QS = -175+ 12.5P (Market Supply)
QD = 125 - 2.5P (Market Demand)
Where Q is output in thousands of units and P is price per unit.
A. Graph and calculate the equilibrium price/output solution.
B. Use this graph to help you algebraically determines the amount of consumer surplus, producer surplus and net social welfare generated in this market.

  • CreatedFebruary 13, 2015
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