Table 5.6
-Refer to Table 5.6.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of economic surplus in this market?

Question

Table 5.6 
-Refer to Table 5.6.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of economic surplus in this market?

Quizplus · Accepted Answer

The economic surplus is the sum of consumer surplus and producer surplus. Consumer surplus is the difference between the price consumers are willing to pay and the price they actually pay. Producer surplus is the difference between the price producers receive and the price they are willing to accept. In this case, the consumer surplus is the area below the demand curve and above the equilibrium price, which is a triangle with a base of 20 thousand units and a height of $20. The producer surplus is the area above the supply curve and below the equilibrium price, which is also a triangle with a base of 20 thousand units and a height of $40. The total economic surplus is the sum of these two areas, which is $300 thousand.

Table 5.6 -Refer to Table 5.6.The Equations Above Describe the Demand and the Demand