Assume the following values for the figures below: Q1 = 20 bags. Q2 = 15 bags. Q3 = 27 bags. The market equilibrium price is $45 per bag. In Figure (a), the price at point a is $85 per bag. The price at point c is $5 per bag. The price at point d is $55 per bag, and the price at point e is $35 per bag. In Figure (b), the price at point f is $59 per bag. The price at point g is $31 per bag. Values for points a, b, and c are the same as in Figure (a). Apply the formula for the area of a triangle (Area = ½ × Base × Height) to answer the following questions.

a. What is the dollar value of the total surplus (producer surplus plus consumer surplus) when the allocatively efficient output level Q1 is being produced?

How large is the dollar value of the consumer surplus at the output level Q1?

b. What is the dollar value of the deadweight loss when output level Q2 is being produced? $ . What is the total surplus when output level Q2 is being produced?

c. What is the dollar value of the deadweight loss when output level Q3 is produced? $ . What is the dollar value of the total surplus when output level Q3 is produced?

Answer rating: 100% (QA)

a The dollar value of the total surplus producer surplus plus consumer surplus when the efficient ou... View the full answer