Using a graph similar to Figure 8.11, show that increasing output beyond the competitive level decreases total

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Using a graph similar to Figure 8.11, show that increasing output beyond the competitive level decreases total surplus because the cost of producing this extra output exceeds the value consumers place on it.

Figure 8.11

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Managerial Economics And Strategy

ISBN: 9780134899701

3rd Edition

Authors: Jeffrey M. Perloff, James A. Brander

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Question Posted: Nov 02, 2021 01:21 AM

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Using a graph similar to Figure 8.11, show that increasing output beyond the competitive level decreases total

Question:

A Supply P2 B MC, = P, E Demand D MC- Q, Q, Units per year Competitive Output, Qi Smaller Output, Q2 (2) Change (2) – (1) (1) Consumer Surplus, CS Producer Surplus, PS -B -C = ACS B- E = APS A + B+ C A D+ E B+ D Total Surplus, TS = CS + PS A+ B+ C+D+E A + B + D -C-E = ATS = -DWL p. $ per unit

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Managerial Economics And Strategy

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