Questions tagged [producer-surplus]

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8
votes
3answers
328 views

To what extent are renewables like solar driving down the cost of oil?

The price of oil has declined by roughly 66% in the past couple of years, and a lot of people want to know why: Some people are saying that the recent trend of oil prices dropping means the global ...
7
votes
3answers
751 views

Can a monopoly INCREASE the market surplus compared with a competitive market?

Monopolies are often blamed for DWLs(Dead Weight Losses), while competitive markets believed to work without DWLs (assuming zero taxes/subsidies and zero externalities). But I think I found an ...
4
votes
1answer
101 views

Is there a class of demand functions that deliver equal surplus to consumers and a monopolist?

Consider a market with a monopolist firm that has zero marginal cost and faces demand $D(p;\mathbf{a})$, where $\mathbf{a}$ is a vector of parameters and $p$ is the price. The monopolist maximizes ...
4
votes
1answer
20k views

Equilibrium price and quantity - consumer and producer surplus

Inverse function of market demand for certain good is equal to $P=100-0.25Q$, inverse supply function is $P=20+0.55Q$. Calculate equilibrium price and quantity. Furthermore calculate consumer and ...
3
votes
1answer
772 views

Change in Welfare from an Incentive based Supply Restriction

My question is related to the following graph: The supporting example is given with regard to a policy of an acreage limitation program to provide incentive for farmers to leave fields fallow. Why ...
2
votes
1answer
141 views

Real life producer surplus

I'd like to ask a question about producer surplus. Basically I got the concept and how we calculate when a demand or price changes on a graph, but I cannot figure out how I should apply to real life. ...
1
vote
2answers
5k views

consumer and producer surplus

So, I am trying to evaluate the consumer and producer surplus. In my notes it is written that the new consumer surplus (defined by the change of the graph from pre-subsidy to post-subsidy) is G + A + ...
1
vote
1answer
80 views

Real world evidence that voluntary exchange is mutually beneficial?

The other day I was having a debate with a supporter of high taxes. I decided to argue against this by explaining the concept of the deadweight loss of taxation. In order to do so, I started with ...
1
vote
0answers
1k views

What are the (immediate) effects of changing a good's price on consumer and producer surplus?

Basically, I'm trying to understand why the total surplus is maximized at the equilibrium and what happens if the price isn't at the equilibrium. Say the price of a good is the equilibrium price. ...
0
votes
0answers
18 views

Does placing a price ceiling in a monopoly increase total surplus?

this may seem like a very simple conceptual question but I have been drawing graphs and googling for quite a while and I think I'm just confusing myself. If we haven't set a price yet for the price ...
-1
votes
1answer
9k views

Calculate deadweight loss from cost and inverse demand function in monopoly [closed]

Consider a monopolist with inverse demand p = 200 - 2*q. The firm's total cost function is C(q) = 100 + 20*q. What is the deadweight loss of monopoly? To my understading, since we don't have any ...