Let us continue with the electric car example from problem 3. Suppose the market for electric cars is competitive.
a. Show that the equilibrium price in this market is $40,000.
b. Which firms will produce an electric car if the price is $40,000?
c. Which consumers will buy an electric car when the price is $40,000?
d. Calculate consumer, producer surplus, and social surplus when the price is $40,000.
e. Compare your answers to those for problem 3.
In Problem 3
There are four consumers willing to pay the following amounts for an electric car:
Consumer 1: $70,000Consumer 2: $20,000Consumer 3: $80,000Consumer 4: $40,000
There are four firms that can produce electric cars. Each can produce one car at the following costs:

Each firm can produce at most one car.

Transcribed Image Text:

Fim A: S30,000 Fim B: S60,000 Fim C: S40,000 Fi D: S20,000