ehav oral205 Vibranium Micro Directions Complete scan and su

ehav oral%205 Vibranium Micro Directions: Complete, scan, and submit the following graded homework exercises. Do not turn your work in on these sheets. As always, show all supporting work in a clear and logical manner P (Vgram) 1) Consider the market for Vibranium to the right. a. If this market achieves equilibrium, how large will 20 the economic surplus be? (Pay attention to units) How large is the producer surplus in this instance? What is the marginal cost of producing another gram of vibranium at the equilibrium quantity? Explain briefly. b. c. 12 d. What is the marginal utility of consuming another gram of vibranium at the equilibrium quantity Explain briefly Q (grams) 10 million Market for Vibranium 2) Consider Graph B below How large is the consumer surplus at equilibrium? a. b. if a price ceiling of $35 is implemented, will this lead to a shortage or surplus, and bow large will that shortage or surplus be? c. If a price ceiling of $35 is implemented, how much will producer surplus decline? d. What is the largest total amount of money these consumers would be willing to pay for 40 units of this good? search

Solution

Ans1) a) at equilibrium demand is equal to supply. Economic surplus = consumer surplus + producer surplus

Consumer surplus = 1/2 * 10 * ( 20 - 12) = 40

Producer surplus = 1/2* 10 * ( 12 - 6) = 30

Economic surplus = 70

b) producer surplus = 30

C) the graph shown is of perfect competition so price is equal to marginal cost so marginal cost is equal to $12

d) marginal revenue is marginal utility so from the graph marginal utility is $12