Suppose that demand in the market for Economics books is and supply is . In market equilibrium, the value of consumer surplus (CS) and producer surplus (PS), respectively, are
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0 marksMicroeconomicsPerfect competitionConsumer and producer surplus and deadweight lossModerateabout 3 min
JNU SIS 2019 Question 20: Perfect competition
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Suppose that demand in the market for Economics books is Q_D = max{0, 3000 - 4P} and supply is Q_S = max{0, -1000 + 12P}. In market equilibrium, the value of consumer surplus (CS) and producer surplus (PS), respectively, are (A) CS = 5000; PS = 5000 (B) CS = 40,000; PS = 40,000/3 (C) CS = 500000; PS = 500000/3 (D) CS = 4000000; PS = 4000000
Perfect competition has come up 115 times in 7 exams since 2006.
What this question tests
This question is on Consumer and producer surplus and deadweight loss, part of Perfect competition in Microeconomics.
Measuring gains from trade in a competitive market and the loss when it is distorted.
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