Question 1

The supply and demand curves for a product have equations  and  , respectively, with equilibrium at  . Which of the following is a formula for producer surplus?

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Question 2

Supply and demand curves for a medical equipment product are given in the graph below.  a) Estimate the equilibrium price and quantity.
b) Estimate the producer surplus.
c) Estimate the total gains from trade for this piece of equipment.

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Question 3

You are considering buying a salt water chlorinator for your swimming pool. The equipment costs $1300, and you estimate that you will save $250 per year with the saltwater system. Will the chlorinator pay for itself in 6 years (i.e. will the present value of the cost of the chemicals equal or exceed the cost of the chlorinator)? Assume an annual interest rate of 7%, compounded continuously. Answer "yes" or "no".

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Question 4

The supply and demand curves for a product have equations  and  , respectively, with equilibrium at  . Which of the following is a formula for total gains from trade?

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The answer of The supply and demand curves for a...

Question 5

Supply and demand curves for an item of medical equipment are shown in the graph below. In order to compete with a new product by a rival company, the price is temporarily lowered to $20,000. What is the reduction (from equilibrium) in producer surplus that results from this artificially low price?

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Question 6

A consultant expects an income stream of $15,000 per year for the next 8 years.
A. Find the present value of this income stream if the interest rate is 2% per year, compounded continuously.
B. Find the future value of this income stream under the same conditions.

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Question 7

The demand curve for a product has equation  , and the supply curve has equation  for  , where q is quantity and p is the price per unit. At an artificially high price of $27, find the quantity consumers are willing to purchase and the quantity producers are willing to supply. Use this information to calculate the producer surplus at this price, to the nearest dollar.

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Question 8

The supply and demand curves for a product have equations  and  , respectively, with equilibrium at  . Suppose an artificially high price of  is imposed, with the resulting consumer demand of  . Which of the following is a formula for the change in total gains from trade caused by the artificial price?

Accepted Answer

Total gains from trade refer to the sum of consumer surplus and producer surplus. 
Before the artificial price is imposed, the equilibrium price is 11eb69ff_fea9_cd6a_af94_4fb511e7ff84_TB8190_11, and the equilibrium quantity is 11eb69ff_fea9_4c4b_af94_eb1f11555e69_TB8190_11. 
At this equilibrium point, the consumer surplus is the area below the demand curve and above the equilibrium price. Using the equation for the demand curve, we can find that consumer surplus is: 
CS = (1/2) * (11eb69ff_fea9_cd69_af94_975611f2dc42_TB8190_11 - 11eb69ff_fea9_cd6b_af94_4c5d80ef2a6c_TB8190_11) * 11eb69ff_fea9_4c4b_af94_eb1f11555e69_TB8190_11 = 11eb69ff_fea9_cd6d_af94_63f2b2a70440_TB8190_11

Similarly, producer surplus is the area below the equilibrium price and above the supply curve. Using the equation for the supply curve, we can find that producer surplus is: 
PS = (11eb69ff_fea9_cd6b_af94_4c5d80ef2a6c_TB8190_11 - 11eb69ff_fea9_ca9b_af94_e727dcc8fd2d_TB8190_11) * 11eb69ff_fea9_4c4b_af94_eb1f11555e69_TB8190_11 = 11eb69ff_fea9_f47c_af94_e9b7aa9d6546_TB8190_11

Total gains from trade are the sum of consumer surplus and producer surplus: 
TGT = 11eb69ff_fea9_cd6d_af94_63f2b2a70440_TB8190_11 + 11eb69ff_fea9_f47c_af94_e9b7aa9d6546_TB8190_11 = 11eb69ff_fea9_f47e_af94_f5c6a5ce28aa_TB8190_11

After the artificial price of 11eb69ff_fea9_cd6b_af94_11213d087954_TB8190_11 is imposed, the quantity demanded by consumers is 11eb69ff_fea9_f47c_af94_6123337f5bf0_TB8190_11. This is greater than the quantity supplied by producers, which remains at 11eb69ff_fea9_4c4b_af94_eb1f11555e69_TB8190_11, resulting in a shortage of goods. The change in total gains from trade is the difference between the total gains from trade at the equilibrium point and the total gains from trade with the artificial price: 
Change in TGT = TGT at equilibrium - TGT with artificial price = (11eb69ff_fea9_cd6d_af94_63f2b2a70440_TB8190_11 + 11eb69ff_fea9_f47c_af94_e9b7aa9d6546_TB8190_11) - (11eb69ff_fea9_6fea_af94_8bf918c48d1d_TB8190_11 + 11eb69ff_fea9_6ef0_af94_58a3407a124d_TB8190_11) = 11eb69ff_fea9_f47e_af94_f5c6a5ce28aa_TB8190_11

Therefore, the answer is B.

Question 9

Supply and demand curves for a product are given by the equations
Demand:  Supply:  where p is price in dollars and q is quantity. Find the equilibrium price.

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Question 10

Supply and demand curves for a product are shown in the following figure. Suppose an artificially low price of $300 is imposed. Estimate the total gains from trade now, to the nearest 500 dollars.

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Question 11

Supply and demand curves for a product are given by the equations
Demand:  Supply:  where p is price in dollars and q is quantity. Compute the producer surplus. Round to the nearest cent.

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Question 12

The supply and demand curves for a product have equations  and  , respectively, with equilibrium at  . Which of the following is a formula for consumer surplus?

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The answer of The supply and demand curves for a...

Question 13

A. Find the present value of an income stream of $1000 per year for a period of 5 years if the interest rate is 8%. Round to the nearest dollar.
B. Find the future value of this income stream. Round to the nearest dollar.

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Question 14

Supply and demand data are given in the following tables.   What is the equilibrium price?

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Question 15

What is the present value of an income stream of $1000 per year for 10 years with an annual interest rate of 10%, compounded continuously? Round to the nearest dollar.

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Question 16

Supply and demand data are given in the following tables.   Estimate the consumer surplus.

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Question 17

From the time a child is born until he is 18, a father plans to set aside $100 times the child's current age each year. Find the present value of this income stream, given an interest rate of 7% compounded continuously. Round to the nearest dollar.

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Question 18

The demand curve for a product has equation  , and the supply curve has equation  for  , where q is quantity and p is the price per unit. Use a calculator to find the equilibrium price and quantity, and use this information to calculate the consumer surplus, to the nearest dollar.

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Question 19

Supply and demand data are given in the following tables.   Which table shows demand?

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Question 20

At what constant, continuous annual rate should you deposit money into an account if you want to have $1,000,000 in 20 years? The account earns 5% interest, compounded continuously. Round to the nearest dollar.

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Quiz 6: Antiderivatives and Applications

The supply and demand curves for a product have equations and , respectively, with equilibrium at . Which of the following is a formula for producer surplus?

Supply and demand curves for a medical equipment product are given in the graph below. a) Estimate the equilibrium price and quantity. b) Estimate the producer surplus. c) Estimate the total gains from trade for this piece of equipment.

The supply and demand curves for a product have equations and , respectively, with equilibrium at . Which of the following is a formula for total gains from trade?

Supply and demand curves for an item of medical equipment are shown in the graph below. In order to compete with a new product by a rival company, the price is temporarily lowered to $20,000. What is the reduction (from equilibrium) in producer surplus that results from this artificially low price?

A consultant expects an income stream of $15,000 per year for the next 8 years. A. Find the present value of this income stream if the interest rate is 2% per year, compounded continuously. B. Find the future value of this income stream under the same conditions.

The supply and demand curves for a product have equations and , respectively, with equilibrium at . Suppose an artificially high price of is imposed, with the resulting consumer demand of . Which of the following is a formula for the change in total gains from trade caused by the artificial price?

Supply and demand curves for a product are given by the equations Demand: Supply: where p is price in dollars and q is quantity. Find the equilibrium price.

Supply and demand curves for a product are shown in the following figure. Suppose an artificially low price of $300 is imposed. Estimate the total gains from trade now, to the nearest 500 dollars.

Supply and demand curves for a product are given by the equations Demand: Supply: where p is price in dollars and q is quantity. Compute the producer surplus. Round to the nearest cent.

The supply and demand curves for a product have equations and , respectively, with equilibrium at . Which of the following is a formula for consumer surplus?

A. Find the present value of an income stream of $1000 per year for a period of 5 years if the interest rate is 8%. Round to the nearest dollar. B. Find the future value of this income stream. Round to the nearest dollar.

Supply and demand data are given in the following tables. What is the equilibrium price?

What is the present value of an income stream of $1000 per year for 10 years with an annual interest rate of 10%, compounded continuously? Round to the nearest dollar.

Supply and demand data are given in the following tables. Estimate the consumer surplus.

From the time a child is born until he is 18, a father plans to set aside $100 times the child's current age each year. Find the present value of this income stream, given an interest rate of 7% compounded continuously. Round to the nearest dollar.

The demand curve for a product has equation , and the supply curve has equation for , where q is quantity and p is the price per unit. Use a calculator to find the equilibrium price and quantity, and use this information to calculate the consumer surplus, to the nearest dollar.

Supply and demand data are given in the following tables. Which table shows demand?

At what constant, continuous annual rate should you deposit money into an account if you want to have $1,000,000 in 20 years? The account earns 5% interest, compounded continuously. Round to the nearest dollar.