曼昆微观经济学课后练习英文答案(第七章)
曼昆微观经济学课后练习英文答案(第七章)

✍ how to define and measure consumer surplus.✍ the link between sellers’ costs of producing a good and the supply curve.✍ how to define and measure producer surplus.✍ that the equilibrium of supply and demand maximizes total surplus in a market. CONTEXT AND PURPOSE:Chapter 7 is the first chapter in a three-chapter sequence on welfare economics and market efficiency. Chapter 7 employs the supply and demand model to develop consumer surplus and producer surplus as a measure of welfare and market efficiency. These concepts are then utilized in Chapters 8 and 9 to determine the winners and losers from taxation and restrictions on international trade.The purpose of Chapter 7 is to develop welfare economics—the study of how the allocation of resources affects economic well-being. Chapters 4 through 6 employed supply and demand in a positive framework, which focused on the question, “What is the equilibrium price and quantity in a market?” This chapter now addresses the normative question, “Is the equilibrium price and quantity in a market the best possible solution to the resource allocation problem, or is it simply the price and quantity that balance supply and demand?” Students will discover that under most circumstances the equilibrium price and quantity is also the one that maximizes welfare.KEY POINTS:? Consumer surplus equals buyers’ willingness to pay for a good minus the amount they actually pay for it, and it measures the benefit buyers get from participating in a market.Consumer surplus can be computed by finding the area below the demand curve and above the price.? Producer surplus equals the amount sellers receive for their goods minus their costs of production, and it measures the benefit sellers get from participating in a market. Producer surplus can be computed by finding the area below the price and above the supply curve.? An allocation of resources that maximizes the sum of consumer and producer surplus is said to be efficient. Policymakers are often concerned with the efficiency, as well as the equality, of economic outcomes.? The equilibrium of supply and demand maximizes the sum of consumer and producer surplus.That is, the invisible hand of the marketplace leads buyers and sellers to allocate resources efficiently.? Markets do not allocate resources efficiently in the presence of market failures such as market power or externalities.CHAPTER OUTLINE:I. Definition of welfare economics: the study of how the allocation of resources affects economic well-being.A. Willingness to Pay1. Definition of willingness to pay: the maximum amount that a buyer will pay for a good.2. Example: You are auctioning a mint-condition recording of Elvis Presley’s first album. Four buyers show up. Their willingness to pay is as follows:for John. Because John is willing to pay more than he has to for the album,he derives some benefit from participating in the market.3. Definition of consumer surplus: the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.4. Note that if you had more than one copy of the album, the price in the auction would end up being lower (a little over $70 in the case of two albums) and both John and Paul would gain consumer surplus.B. Using the Demand Curve to Measure Consumer Surplus1. We can use the information on willingness to pay to derive a demand curve for the rare2. . Because the demand curve shows the buyers’ willingness to pay, we can use the demand curve to measure consumer surplus.C. How a Lower Price Raises Consumer Surplusare paying less for the product than before (area A on the graph).b. Because the price is now lower, some new buyers will enter the market and receive consumer surplus on these additional units of output purchased (area B on the graph).D. What Does Consumer Surplus Measure?1. Remember that consumer surplus is the difference between the amount that buyers are willing to pay for a good and the price that they actually pay.2. Thus, it measures the benefit that consumers receive from the good as the buyers themselves perceive it.III. Producer SurplusA. Cost and the Willingness to Sell1. Definition of cost: the value of everything a seller must give up to produce a good .2. Example: You want to hire someone to paint your house. You accept bids for the work from four sellers. Each painter is willing to work if the price you will pay exceeds her opportunity cost. (Note that this opportunity cost thus represents willingness to sell.) The costs are: ALTERNATIVE CLASSROOM EXAMPLE:Review the material on price ceilings from Chapter 6. Redraw the market for two-bedroom apartments in your town. Draw in a price ceiling below the equilibriumprice.Then go through:✍ consumer surplus before the price ceiling is put into place.✍ consumer surplus after the price ceiling is put into place.You will need to take some time to explain the relationship between the producers’ willingness to sell and the cost of producing the good. The relationship between cost and the supply curve is not as apparent as the relationship between the demand curve and willingness to pay. It is important to stress that consumer surplus is measured in monetary terms. Consumer surplus gives us a way to place a monetary cost on inefficient market outcomes (due to government involvement or market failure).except for Grandma. Because Grandma receives more than she would require to paint the house, she derives some benefit from producing in the market.4.Definition of producer surplus: the amount a seller is paid for a good minus the seller’s cost of providing it.5. Note that if you had more than one house to paint, the price in the auction would end up being higher (a little under $800 in the case of two houses) and both Grandma and Georgia would gain producer surplus.B. Using the Supply Curve to Measure Producer Surplus1. We can use the information on cost (willingness to sell) to derive a supply curve for2. marginal seller . Because the supply curve shows the sellers’ cost (willingness to sell), we can use the supply curve to measure producer surplus.are receiving more for the product than before (area C on the graph).b. Because the price is now higher, some new sellers will enter the market and receive producer surplus on these additional units of output sold (area D on the graph).D. Producer surplus is used to measure the economic well-being of producers, much like consumer surplus is used to measure the economic well-being of consumers.ALTERNATIVE CLASSROOM EXAMPLE:Review the material on price floors from Chapter 6. Redraw the market for anagricultural product such as corn. Draw in a price support above the equilibriumprice.Then go through:✍ producer surplus before the price support is put in place.✍ producer surplus after the price support is put in place.Make sure that you discuss the cost of the price support to taxpayers.IV.Market EfficiencyA. The Benevolent Social Planner1. The economic well-being of everyone in society can be measured by total surplus, which is the sum of consumer surplus and producer surplus:Total Surplus = Consumer Surplus + Producer SurplusTotal Surplus = (Value to Buyers – Amount Paid by Buyers) +(Amount Received by Sellers – Cost to Sellers)Because the Amount Paid by Buyers = Amount Received bySellers:2. Definition of efficiency: the property of a resource allocation of maximizing the total surplus received by all members of society .3. Definition of equality: the property of distributing economic prosperity uniformly the members of society .a. Buyers who value the product more than the equilibrium price will purchase the product; those who do not, will not purchase the product. In other words, the free market allocates the supply of a good to the buyers who value it most highly, as measured by their willingness to pay.b. Sellers whose costs are lower than the equilibrium price will produce the product; those whose costs are higher, will not produce the product. In other words, the free market allocates the demand for goods to the sellers who can produce it at the lowest cost.to the marginal buyer is greater than the cost to the marginal seller so total surplus would rise if output increases.b. At any quantity of output greater than the equilibrium quantity, the value of the product to the marginal buyer is less than the cost to the marginal seller so total surplus would rise if output decreases.3. Note that this is one of the reasons that economists believe Principle #6: Markets are usually a good way to organize economic activity.It would be a good idea to remind students that there are circumstances whenthe market process does not lead to the most efficient outcome. Examplesinclude situations such as when a firm (or buyer) has market power over priceor when there are externalities present. These situations will be discussed inlater chapters.Pretty Woman, Chapter 6. Vivien (Julia Roberts) and Edward (Richard Gere)negotiate a price. Afterward, Vivien reveals she would have accepted a lowerprice, while Edward admits he would have paid more. If you have done a goodjob of introducing consumer and producer surplus, you will see the light bulbsgo off above your students’ heads as they watch this clip.C. In the News: Ticket Scalping1. Ticket scalping is an example of how markets work to achieve an efficient outcome.2. This article from The Boston Globe describes economist Chip Case’s experience with ticket scalping.D. Case Study: Should There Be a Market in Organs?1. As a matter of public policy, people are not allowed to sell their organs.a. In essence, this means that there is a price ceiling on organs of $0.b. This has led to a shortage of organs.2. The creation of a market for organs would lead to a more efficient allocation of resources, but critics worry about the equity of a market system for organs.V. Market Efficiency and Market FailureA. To conclude that markets are efficient, we made several assumptions about how markets worked.1. Perfectly competitive markets.2. No externalities.B. When these assumptions do not hold, the market equilibrium may not be efficient.C. When markets fail, public policy can potentially remedy the situation. SOLUTIONS TO TEXT PROBLEMS:Quick Quizzes1. Figure 1 shows the demand curve for turkey. The price of turkey is P1 and the consumer surplus that results from that price is denoted CS. Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. It measures the benefit to buyers of participating in a market.Figure 1 Figure 22. Figure 2 shows the supply curve for turkey. The price of turkey is P1 and the producer surplus that results from that price is denoted PS. Producer surplus is the amount sellers are paid for a good minus the sellers’ cost of providing it (measured by the supply curve). It measures the benefit to sellers of participating in a market.Figure 33. Figure 3 shows the supply and demand for turkey. The price of turkey is P1, consumer surplus is CS, and producer surplus is PS. Producing more turkeys than the equilibrium quantity would lower total surplus because the value to the marginal buyer would be lower than the cost to the marginal seller on those additional units.Questions for Review1. The price a buyer is willing to pay, consumer surplus, and the demand curve are all closely related. The height of the demand curve represents the willingness to pay of the buyers. Consumer surplus is the area below the demand curve and above the price, which equals the price that each buyer is willing to pay minus the price actually paid.2. Sellers' costs, producer surplus, and the supply curve are all closely related. The height of the supply curve represents the costs of the sellers. Producer surplus is the area below the price and above the supply curve, which equals the price received minus each seller's costs of producing the good.Figure 43. Figure 4 shows producer and consumer surplus in a supply-and-demand diagram.4. An allocation of resources is efficient if it maximizes total surplus, the sum of consumer surplus and producer surplus. But efficiency may not be the only goal of economic policymakers; they may also be concerned about equity the fairness of the distribution of well-being.5. The invisible hand of the marketplace guides the self-interest of buyers and sellers into promoting general economic well-being. Despite decentralized decision making and self-interested decision makers, free markets often lead to an efficient outcome.6. Two types of market failure are market power and externalities. Market power may cause market outcomes to be inefficient because firms may cause price and quantity to differ from the levels they would be under perfect competition, which keeps total surplus from being maximized. Externalities are side effects that are not taken into account by buyers and sellers. As a result, the free market does not maximize total surplus.Problems and Applications1. a. Consumer surplus is equal to willingness to pay minus the price paid. Therefore, Melissa’s willingness to pay must be $200 ($120 + $80).b. Her consumer surplus at a price of $90 would be $200 ? $90 = $110.c. If the price of an iPod was $250, Melissa would not have purchased one because the price is greater than her willingness to pay. Therefore, she would receive no consumer surplus.2. If an early freeze in California sours the lemon crop, the supply curve for lemons shifts to the left, as shown in Figure 5. The result is a rise in the price of lemons and a decline in consumer surplus from A + B + C to just A. So consumer surplus declines by the amount B + C.Figure 5 Figure 6In the market for lemonade, the higher cost of lemons reduces the supply of lemonade, as shown in Figure 6. The result is a rise in the price of lemonade and a decline in consumer surplus from D + E + F to just D, a loss of E + F. Note that an event that affects consumer surplus in one market often has effects on consumer surplus in other markets.3. A rise in the demand for French bread leads to an increase in producer surplus in the market for French bread, as shown in Figure 7. The shift of the demand curve leads to an increased price, which increases producer surplus from area A to area A + B + C.Figure 7The increased quantity of French bread being sold increases the demand for flour, as shown in Figure 8. As a result, the price of flour rises, increasing producer surplus from area Dto D + E + F. Note that an event that affects producer surplus in one market leads to effects on producer surplus in related markets.Figure 84. a.Figure 9b. When the price of a bottle of water is $4, Bert buys two bottles of water. His consumer surplus is shown as area A in the figure. He values his first bottle of water at $7, but pays only $4 for it, so has consumer surplus of $3. He values his second bottle of water at $5, but pays only $4for it, so has consumer surplus of $1. Thus Bert’s total consumer surplus is $3 + $1 = $4, which is the area of A in the figure.c. When the price of a bottle of water falls from $4 to $2, Bert buys three bottles of water, an increase of one. His consumer surplus consists of both areas A and B in the figure, an increase in the amount of area B. He gets consumer surplus of $5 from the first bottle ($7 value minus $2 price), $3 from the second bottle ($5 value minus $2 price), and $1 from the third bottle ($3 value minus $2 price), for a total consumer surplus of $9. Thus consumer surplus rises by $5 (which is the size of area B) when the price of a bottle of water falls from $4 to $2.5. a.Figure 10b. When the price of a bottle of water is $4, Ernie sells two bottles of water. His producer surplus is shown as area A in the figure. He receives $4 for his first bottle of water, but it costs only $1 to produce, so Ernie has producer surplus of $3. He also receives $4 for his second bottle of water, which costs $3 to produce, so he has producer surplus of $1. Thus Ernie’s total producer surplus is $3 + $1 = $4, which is the area of A in the figure.c. When the price of a bottle of water rises from $4 to $6, Ernie sells three bottles of water, an increase of one. His producer surplus consists of both areas A and B in the figure, an increase by the amount of area B. He gets producer surplus of $5 from the first bottle ($6 price minus $1 cost), $3 from the second bottle ($6 price minus $3 cost), and $1 from the third bottle ($6 price minus $5 price), for a total producer surplus of $9. Thus producer surplus rises by $5 (which is the size of area B) when the price of a bottle of water rises from $4 to $6.6. a. From Ernie’s supply schedule and Bert’s demand schedule, the quantityequilibrium quantity of two.b. At a price of $4, consumer surplus is $4 and producer surplus is $4, as shown in Problems 3 and 4 above. Total surplus is $4 + $4 = $8.c. If Ernie produced one less bottle, his producer surplus would decline to $3, as shown in Problem 4 above. If Bert consumed one less bottle, his consumer surplus would decline to $3, as shown in Problem 3 above. So total surplus would decline to $3 + $3 = $6.d. If Ernie produced one additional bottle of water, his cost would be $5, but the price is only $4, so his producer surplus would decline by $1. If Bert consumed one additional bottle of water, his value would be $3, but the price is $4, so his consumer surplus would decline by $1. So total surplus declines by $1 + $1 = $2.7. a. The effect of falling production costs in the market for stereos results in a shift to the right in the supply curve, as shown in Figure 11. As a result, the equilibrium price of stereos declines and the equilibrium quantity increases.Figure 11b. The decline in the price of stereos increases consumer surplus from area A to A + B + C + D, an increase in the amount B + C + D. Prior to the shift in supply, producer surplus was areas B + E (the area above the supply curve and below the price). After the shift in supply, producer surplus is areas E + F + G. So producer surplus changes by the amount F + G – B, which may be positive or negative. The increase in quantity increases producer surplus, while the decline in the price reduces producer surplus. Because consumer surplus rises by B + C + D and producer surplus rises by F + G – B, total surplus rises by C + D + F + G.c. If the supply of stereos is very elastic, then the shift of the supply curve benefits consumers most. To take the most dramatic case, suppose the supply curve were horizontal, as shown in Figure 12. Then there is no producer surplus at all. Consumers capture all the benefits of falling production costs, with consumer surplus rising from area A to area A + B.Figure 128. Figure 13 shows supply and demand curves for haircuts. Supply equals demand at a quantity of three haircuts and a price between $4 and $5. Firms A, C, and D should cut the hair of Ellen, Jerry, and Phil. Oprah’s willingness to pay is too low and firm B’s costs are too high, so they do not participate. The maximum total surplus is the area between the demand and supply curves, which totals $11 ($8 value minus $2 cost for the first haircut, plus $7 value minus $3 cost for the second, plus $5 value minus $4 cost for the third).Figure 139. a. The effect of falling production costs in the market for computers results in a shift to the right in the supply curve, as shown in Figure 14. As a result, the equilibrium price of computers declines and the equilibrium quantity increases. The decline in the price of computers increases consumer surplus from area A to A + B + C + D, an increase in the amount B + C + D.Figure 14 Figure 15Prior to the shift in supply, producer surplus was areas B + E (the area above thesupply curve and below the price). After the shift in supply, producer surplus isareas E + F + G. So producer surplus changes by the amount F + G – B, whichmay be positive or negative. The increase in quantity increases producer surplus,while the decline in the price reduces producer surplus. Because consumer surplusrises by B + C + D and producer surplus rises by F + G – B, total surplus rises byC +D + F + G.b. Because typewriters are substitutes for computers, the decline in the price of computers means that people substitute computers for typewriters, shifting the demand for typewriters to the left, as shown in Figure 15. The result is a decline in both the equilibrium price and equilibrium quantity of typewriters. Consumer surplus in the typewriter market changes from area A + B to A + C, a net change of C – B. Producer surplus changes from area C + D + E to area E, a net loss of C + D. Typewriter producers are sad about technological advances in computers because their producer surplus declines.c. Because software and computers are complements, the decline in the price and increase in the quantity of computers means that the demand for software increases, shifting the demand for software to the right, as shown in Figure 16. The result is an increase in both the price and quantity of software. Consumer surplus in the software market changes from B + C to A + B, anet change of A – C. Producer surplus changes from E to C + D + E, an increase of C + D, so software producers should be happy about the technological progress in computers.Figure 16d. Yes, this analysis helps explain why Bill Gates is one the world’s richest people, because his company produces a lot of software that is a complement with computers and there has been tremendous technological advance in computers.10. a. With Provider A, the cost of an extra minute is $0. With Provider B, the cost of anextra minute is $1.b. With Provider A, my friend will purchase 150 minutes [= 150 – (50)(0)]. WithProvider B, my friend would purchase 100 minutes [= 150 – (50)(1)].c. With Provider A, he would pay $120. The cost would be $100 with Provider B.Figure 17d. Figure 17 shows the friend’s demand. With Provider A, he buys 150 minutes andhis consumer surplus is equal to (1/2)(3)(150) – 120 = 105. With Provider B, hisconsumer surplus is equal to (1/2)(2)(100) = 100.e. I would recommend Provider A because he receives greater consumer surplus.11. a. Figure 18 illustrates the demand for medical care. If each procedure has a price of $100, quantity demanded will be Q1 procedures.Figure 18b. If consumers pay only $20 per procedure, the quantity demanded will be Q2 procedures. Because the cost to society is $100, the number of procedures performed is too large to maximize total surplus. The quantity that maximizes total surplus is Q1 procedures, which is less than Q2.c. The use of medical care is excessive in the sense that consumers get procedures whose value is less than the cost of producing them. As a result, the economy’s total surplus is reduced.d. To prevent this excessive use, the consumer must bear the marginal cost of the procedure. But this would require eliminating insurance. Another possibility would be that the insurance company, which pays most of the marginal cost of the procedure ($80, in this case) could decide whether the procedure should be performed. But the insurance company does not get the benefits of the procedure, so its decisions may not reflect the value to the consumer.。
曼昆《经济学原理(微观经济学分册)》(第7版)课后习题详解

曼昆《经济学原理(微观经济学分册)》(第7版)课后习题详解第1章经济学十大原理一、概念题1.稀缺性(scarcity)答:经济学研究的问题和经济物品都是以稀缺性为前提的。
稀缺性指在给定的时间内,相对于人的需求而言,经济资源的供给总是不足的,也就是资源的有用性与有限性。
人类消费各种物品的欲望是无限的,满足这种欲望的物品,有的可以不付出任何代价而随意取得,称之为自由物品,如阳光和空气;但绝大多数物品是不能自由取用的,因为世界上的资源(包括物质资源和人力资源)是有限的,这种有限的、为获取它必须付出某种代价的物品,称为“经济物品”。
正因为稀缺性的客观存在,地球上就存在着资源的有限性和人类的欲望与需求的无限性之间的矛盾。
经济学的一个重要研究任务就是:“研究人们如何进行抉择,以便使用稀缺的或有限的生产性资源(土地、劳动、资本品如机器、技术知识)来生产各种商品,并把它们分配给不同的社会成员进行消费。
”也就是从经济学角度来研究使用有限的资源来生产什么、如何生产和为谁生产的问题。
2.经济学(economics)答:经济学是研究如何将稀缺的资源有效地配置给相互竞争的用途,以使人类的欲望得到最大限度满足的科学。
时下经常见诸国内报刊文献的“现代西方经济学”一词,大多也都在这个意义上使用。
自从凯恩斯的名著《就业、利息和货币通论》于1936年发表之后,西方经济学界对经济学的研究便分为两个部分:微观经济学与宏观经济学。
微观经济学是以单个经济主体(作为消费者的单个家庭或个人,作为生产者的单个厂商或企业,以及单个产品或生产要素市场)为研究对象,研究单个经济主体面对既定的资源约束时如何进行选择的科学。
宏观经济学则以整个国民经济为研究对象,主要着眼于对经济总量的研究。
3.效率(efficiency)答:效率指人们在实践活动中的产出与投入之比值,或者是效益与成本之比值,如果比值大,效率就高;反之,比值小,效率就低。
效率与产出或者收益的大小成正比,而与成本或投入成反比,也就是说,如果想提高效率,必须降低成本或投入,提高收益或产出。
微观经济学第第七章课后答案资料

微观经济学第第七章课后答案第7章 课后练习答案一、基本概念 1、一般均衡:经济中所有经济单位及其市场同时处于均衡的一种状态。
2、帕累托最优条件:1)交换的帕累托最化条件:A B XY XY MRS MRS = ;2)生产的帕累托最优条件:C D LK LK MRTS MRTS = ;3)交换和生产的帕累托最优条件:XY XY MRS MRT = 3、帕累托改进:在资源既定的情况下,如果经济社会通过资源重新配置可以在不使得他人境况受到损害的条件下使得某些人的境况得到改善,则社会福利得到增进。
二、分析简答1、什么是局部均衡和一般均衡,两者的区别和联系是什么?答:局部均衡是指:仅仅是某一种产品实现了均衡或某一种市场(例如,产品市场或要素市场)实现了均衡。
一般均衡是指经济中所有经济单位及其市场同时处于均衡的一种状态。
局部均衡把市场上其他商品和生产要素的数量与价格对这种商品或生产要素价格的影响忽略不计或视为不变,即假定这一商品或生产要素的价格只取决于它本身的供求状况,而不受其他商品的价格和供求状况的影响。
而在一般均衡分析中,不仅要分析影响该商品价格变动的供求关系,还要分析影响该商品生产的生产要素市场、消费者收入等多种因素的影响,即把经济中的所有经济单位和所有市场联系起来加以考虑和分析。
2、为什么完全竞争可以实现帕累托最优所需具备的三个条件?完全竞争经济在一定的假设条件下存在着一般均衡,即存在一组价格,在该组价格下市场中的供求平衡。
假设该组价格为Px ,P Y ,…,P L ,P K ,…。
其中P X ,P Y ,…表示商品X ,Y ,…的均衡价格;P L ,P K ,…表示要素L ,K ,…的均衡价格。
在完全竞争条件下,每个消费者和生产者都是价格的接受者,消费者在既定价格下追求自身效用的最大化,生产者在既定价格下追求自身利润的最大化。
对于消费者而言,任意一个消费者在完全竞争经济中效用最大化的条件是任意两种商品的边际替代率等于两种商品的价格比率,对于消费者C ,有:/A XY X Y MRS P P = ;对于消费者B ,有: /B XY X Y MRS P P =;将以上两式整理可得:A B XY XY MRS MRS =;此公式就是交换的帕累托最优条件。
曼昆 经济学原理第七 课后题及答案

二十三章1下列每种交易会影响CDP的哪一部分(如果有影响的话)并解释之。
A.家庭购买了一台新冰箱。
答:家庭购买了一台新冰箱会增加GDP中的消费(C)部分,因为家庭用于家用电器的支出计算在消费的耐用品类中。
B.杰妮姑妈买了一所新房子。
答:杰妮姑妈买了一所新房子会增加GDP中的投资(1)部分,因为家庭住宅能长期供人居住,提供服务。
它比一般耐用消费品的使用寿命更长,因此把住宅房屋的投资计算在投资中。
C.福特汽车公司由其存货中出售了一部雷鸟牌汽车。
答:福利汽车公司由其存货中出售了一部雷鸟牌汽车会减少现期GDP中的投资,因为销售中间物品存货时,企业的存货投资是负的,因而减少了当期的GDP。
C.你买了一个比萨饼。
答:我买了一个比萨饼会增加GDP中的消费(C),因为我用于购买食品的支出计算在消费的非耐用品类中。
D.加利福尼亚重新铺设了101号高速公路。
答:加利福尼亚重新铺设了101号高速公路增加了GDP中的政府购买(G),因为修建高速公路是政府的行为。
E.你的父母购买了一瓶法国红酒。
答:我的父母购买了一瓶法国红酒会减少GDP中的净出口(NX),因为法国红酒是进口食品,它的购买增加了美国的进口。
F.本田公司扩大其在俄亥俄州马利斯维尔的工厂。
答:本田公司扩大其在俄亥俄州马利斯维尔的工厂增加了GDP中的净出口(NX),因为本田公司是一家日本企业,它在美国的投资减少了美国对日本本田汽车的进口,使NX增加2.GDP组成部分中的“政府购买”并不包括用于社会保障这类转移支付的支出。
想想GDP 的定义,解释为什么转移支付不包括在政府购买内答:因为转移支付并不是要交换现在生产的物品或劳务,从宏观经济的角度看,转移支付就像税收和回扣一样。
转移支付和税收一样改变了家庭收入,但并没有反映经济的生产。
由于GDP是要衡量在某一既定时期一个国家从物品与劳务的生产中得到的收入,所以,不把转移支付包括在政府购买内。
6.考虑以下美国GDP的数据:A.1996年到1997年间名义收入增长率是多少(注意:增长率是一个时期到下一个时期百分比的变动。
曼昆《经济学原理》第6版 微观经济学分册 第7章 课后习题答案p157p159

第三篇市场和福利第七章消费者、生产者与市场效率问题与应用1.Melissa用120美元购买了一个iPod,并得到了80美元的消费者剩余。
A.她的支付意愿是多少?答:消费者剩余等于支付意愿减去付出的价格。
因此,梅莉莎须支付200 美元($120 + $80)。
B.如果她在降价销售时买了售价为90美元的iPod,她的消费者剩余会是多少?答:此时,她的消费者剩余为:200-90 =110 美元。
C.如果iPod的价格是250美元,她的消费者剩余会是多少?答:如果iPod 的价格是250 美元,其价格大于梅莉莎的支付愿意,因此她不会再买,这时的消费者剩余就为零。
2.加利福尼亚早来的寒流使柠檬变酸。
柠檬市场上消费者剩余会有什么变动?柠檬水市场上消费者剩余会有什么变动?用图形说明你的答案。
答:柠檬变酸,消费者对柠檬的评价下降,需求曲线向左下方移动。
在其他条件不变的情况下,消费者剩余减少。
如图7-2(a)所示,柠檬质量下降,使需求曲线从D1下降到D 2,△APE是原先的消费者剩余,△A′P′E′是变动后的消费者剩余,△APE>△A′P′E′。
由于柠檬价格的下降,柠檬水的投入成本减少,柠檬水的价格也下降。
在其他条件不变的情况下,柠檬水市场上消费者剩余增加,如图7-2(b)所示。
图7-2 寒流的影响3.假设对法国面包的需求增加。
在法国面包市场上,生产者剩余会发生什么变动?在面粉市场上,生产者剩余会发生什么变动?用图形说明你的答案。
答:由于需求增加,在其他条件不变的情况下,法国面包的价格会上升,市场上的生产者剩余增加。
如图7 -3(a),价格从P1 上升到P2 ,销量从Q 1上升到Q 2,生产者剩余从面积P1BE1增加到面积P2BE2 。
由于面包产量上升,它的生产要素面粉的需求量也会上升。
在其他条件不变的情况下,面粉价格上升,市场上的生产者剩余增加。
如图7-3(b)所示,生产者剩余从面积P1BE1增加到面积P2BE2 。
经济学原理曼昆课后答案chapter7.doc

Problems and Applications1.If an early freeze in California sours the lemon crop, the supply curve for lemons shiftsto the left, as shown in Figure 7-5.The result is a rise in the price of lemons and adecline in consumer surplus from A + B + C to just A. So consumer surplus declines by the amount B + C.Figure 7-5In the market for lemonade, the higher cost of lemons reduces the supply of lemonade,as shown in Figure 7-6.The result is a rise in the price of lemonade and a decline inconsumer surplus from D + E + F to just D, a loss of E + F. Note that an event that affectsconsumer surplus in one market often has effects on consumer surplus in other markets.Figure 7-62. A rise in the demand for French bread leads to an increase in producer surplus in themarket for French bread, as shown in Figure 7-7.The shift of the demand curve leads to an increased price, which increases producer surplus from area A to area A + B + C.Figure 7-7The increased quantity of French bread being sold increases the demand for flour, asshown in Figure 7-8.As a result, the price of flour rises, increasing producer surplusfrom area D to D + E + F. Note that an event that affects producer surplus in onemarket leads to effects on producer surplus in related markets.Figure 7-83. a.Bert’ s demand schedule is:Price Quantity DemandedMore than $7 0$5 to $7 1$3 to $5 2$1 to $3 3$1 or less 4Bert’ s demand curve is shown in Figure 7 -9.Figure 7-9b.When the price of a bottle of water is $4, Bert buys two bottles of water.Hisconsumer surplus is shown as area A in the figure.He values his first bottle ofwater at $7, but pays only $4 for it, so has consumer surplus of $3.He valueshis second bottle of water at $5, but pays only $4 for it, so has consumersurplus of $1.Thus Bert’ s total consumer surplus is $3 + $1 = $4, which isthe area of A in the figure.c.When the price of a bottle of water falls from $4 to $2, Bert buys three bottlesof water, an increase of one. His consumer surplus consists of both areas Aand B in the figure, an increase in the amount of area B. He gets consumersurplus of $5 from the first bottle ($7 value minus $2 price), $3 from thesecond bottle ($5 value minus $2 price), and $1 from the third bottle ($3 valueminus $2 price), for a total consumer surplus of $9. Thus consumer surplusrises by $5 (which is the size of area B) when the price of a bottle of water fallsfrom $4 to $2.4. a. Ernie ’ s supply schedule for water is:Price Quantity SuppliedMore than $7 4$5 to $7 3$3 to $5 2$1 to $3 1Less than $1 0Ernie’ s supply curve is shown in Figure 7 -10.Figure 7-10b.When the price of a bottle of water is $4, Ernie sells two bottles of water.Hisproducer surplus is shown as area A in the figure.He receives $4 for his firstbottle of water, but it costs only $1 to produce, so Ernie has producer surplusof $3.He also receives $4 for his second bottle of water, which costs $3 toproduce, so he has producer surplus of$1. Thus Ernie’ s total producersurplus is $3 + $1 = $4, which is the area of A in the figure.c.When the price of a bottle of water rises from $4 to $6, Ernie sells three bottlesof water, an increase of one.His producer surplus consists of both areas Aand B in the figure, an increase by the amount of area B.He gets producersurplus of $5 from the first bottle ($6 price minus $1 cost), $3 from the secondbottle ($6 price minus $3 cost), and $1 from the third bottle ($6 price minus $5price), for a total producer surplus of $9.Thus producer surplus rises by $5(which is the size of area B) when the price of a bottle of water rises from $4to $6.5. a. From Ernie ’ s supply schedule and Bert ’ s demand schedule, the quantitydemanded and supplied are:Price Quantity Supplied Quantity Demanded$ 2 1 34 2 26 3 1Only a price of $4 brings supply and demand into equilibrium, withan equilibrium quantity of 2.b.At a price of $4, consumer surplus is $4 and producer surplus is $4, as shownin problems 3 and 4.Total surplus is $4 + $4 = $8.c.If Ernie produced one fewer bottle, his producer surplus would decline to $3,as shown in problem 4.If Bert consumed one fewer bottle, his consumersurplus would decline to $3, as shown in problem 3. So total surplus would declineto $3 + $3 = $6.d.If Ernie produced one additional bottle of water, his cost would be $5, but theprice is only $4, so his producer surplus would decline by $1.If Bertconsumed one additional bottle of water, his value would be $3, but the priceis $4, so his consumer surplus would decline by $1.So total surplus declinesby $1 + $1 = $2.6. a.The effect of falling production costs in the market for stereos results in a shiftto the right in the supply curve, as shown in Figure 7-11.As a result, theequilibrium price of stereos declines and the equilibrium quantity increases.b.The decline in the price of stereos increases consumer surplus from area A to A+ B + C + D, an increase in the amount B + C + D.Prior to the shift in supply,producer surplus was areas B + E (the area above the supply curve and belowthe price).After the shift in supply, producer surplus is areas E + F + G.Soproducer surplus changes by the amount F + G - B, which may be positive ornegative.The increase in quantity increases producer surplus, while thedecline in the price reduces producer surplus.Since consumer surplus risesby B + C + D and producer surplus rises by F + G - B, total surplus rises by C+ D+F+G.c.If the supply of stereos is very elastic, then the shift of the supply curvebenefits consumers most.To take the most dramatic case, suppose thesupply curve were horizontal, as shown in Figure 7-12.Then there is noproducer surplus at all.Consumers capture all the benefits of fallingproduction costs, with consumer surplus rising from area A to area A + B.Figure 7-11Figure 7-127. Figure 7-13 shows supply and demand curves for haircuts. Supply equals demand ata quantity of three haircuts and a price between $4 and $5. Firms A, C, and D shouldcut the hair of Sally Jessy, Jerry, and Montel. Oprah ’ s willingness to pay is too low and firm B ’ s costs are too high, so they do not participate. The maximum total surplus isthe area between the demand and supply curves, which totals $11 ($8 value minus$2 cost for the first haircut, plus $7 value minus $3 cost for the second, plus $5 valueminus $4 cost for the third).Figure 7-138. a.The effect of falling production costs in the market for computers results in ashift to the right in the supply curve, as shown in Figure 7-14.As a result, theequilibrium price of computers declines and the equilibrium quantity increases.The decline in the price of computers increases consumer surplus from area Ato A + B + C + D, an increase in the amount B + C + D.Figure 7-14Prior to the shift in supply, producer surplus was areas B + E (the area abovethe supply curve and below the price).After the shift in supply, producersurplus is areas E + F + G.So producer surplus changes by the amount F + G- B, which may be positive or negative.The increase in quantity increasesproducer surplus, while the decline in the price reduces producer surplus. Sinceconsumer surplus rises by B + C + D and producer surplus rises by F + G - B,total surplus rises by C + D + F + G.——Figure 7-15b.Since adding machines are substitutes for computers, the decline in the priceof computers means that people substitute computers for adding machines,shifting the demand for adding machines to the left, as shown in Figure 7-15.The result is a decline in both the equilibrium price and equilibrium quantity ofadding machines.Consumer surplus in the adding-machine market changesfrom area A + B to A + C, a net gain of C - B.Producer surplus changes fromarea C + D + E to area E, a net loss of C + D.Adding machine producers aresad about technological advance in computers because their producersurplus declines.c.Since software and computers are complements, the decline in the price andincrease in the quantity of computers means that people’ s demand forsoftware increases, shifting the demand for software to the right, as shown inFigure 7-16. The result is an increase in both the price and quantity of software.Consumer surplus in the software market changes from B + C to A+B, a net increase of A - C. Producer surplus changes from E to C + D + E, anincrease of C + D, so software producers should be happy about the technologicalprogress in computers.d.Yes, this analysis helps explain why Bill Gates is one the world’ s richest msince his company produces a lot of software that’ s a complement withcomputers and there has been tremendous technological advance incomputers.——Figure 7-169. a. Figure 7-17 illustrates the demand for medical care. If each procedure has aprice of $100, quantity demanded will be Q 1 procedures.Figure 7-17b.If consumers pay only $20 per procedure, the quantity demanded will be Q 2procedures.Since the cost to society is $100, the number of proceduresperformed is too large to maximize total surplus.The quantity thatmaximizes total surplus is Q 1 procedures, which is less than Q2.c.The use of medical care is excessive in the sense that consumers getprocedures whose value is less than the cost of producing them.As a result,——the economy’ s total surplus is reduced.d.To prevent this excessive use, the consumer must bear the marginal cost ofthe procedure.But this would require eliminating insurance.Anotherpossibility would be that the insurance company, which pays most of themarginal cost of the procedure ($80, in this case) could decide whether theprocedure should be performed.But the insurance company doesn’ t get thebenefits of the procedure, so its decisions may not reflect the value to theconsumer.10. a. Figure 7-18 illustrates the effect of the drought. The supply curve shifts tothe left, leading to a rise in the equilibrium price from P 1 to P 2 and a decline inthe equilibrium quantity from Q 1 to Q 2 .Figure 7-18b.If the price of water is not allowed to change, there will be an excess demandfor water, with the shortage shown on the figure as the difference between Q 1and Q 3 .c.The system for allocating water is inefficient because it no longer allocateswater to those who value it most highly.Some people who value water atmore than its cost of production will be unable to obtain it, so societysurplus isn’ t maximized.The allocation system seems unfair as well.Water is allocated simply on pastusage, rewarding past wastefulness.If a family’ s demand for water increases,——say because of an increase in family size, the policy doesn ’ t allow them to obtain more water. Poor families, who probably used water mostly fornecessary uses like drinking, would suffer more than wealthier families whowould have to cut back only on luxury uses of water like operating backyardfountains and pools. However, the policy also keeps the price of water lower,which benefits poor families, since otherwise more of their family budgetwould have to go for water.d. If the city allowed the price of water to rise to its equilibrium price P 2 , theallocation would be more efficient. Quantity supplied would equal quantitydemanded and there would be no shortage. Total surplus would bemaximized.Whether the market allocation would be more or less fair than theproportionate reduction in water under the old policy is difficult to say, but it islikely to be more fair. Notice that the quantity supplied would be higher (Q 2)in this case than under the water restrictions (Q 3 ), so there ’ s less reduction inwater usage. To make the market solution even more fair, the governmentcould provide increased tax relief or welfare payments for poor families whosuffer from paying the higher water prices.。
微观经济学 曼昆 第七章

25
C. 新进入市场买者的消费者剩余
20
= ½ x 10 x $10 = $50
15 D. 已进入市场买者由于价格下降而增加的消费
者剩余
= 10 x $10 = $100
10
5 0
0
需求曲线 Q
5 10 15 20 25 17
成本与供给曲线
▪ 成本:卖者为了生产一种物品而必须放弃的每种东西的价值(也是机会成本) ▪ 包括所有用于生产物品的资源的成本和卖者对于他们自己时间的评价 ▪ 例如:三个提供除草服务卖者的成本
总结:总消费者剩余等于需求曲 线以下和价格以上的面积
$200
$150
$100
$50
$0
Q
01234
消费者、生产者与市场效率
12
许多消费者的剩余与一条光滑的需求曲线
当 Q = 5(千双), 支付意愿是$50
边际买者为每每双双鞋鞋的的价格
如果 P = $30.
他的消费者剩余
P
$ 60
= $20.
50
对鞋的需求
因此, Qd = 2 当价格为P = $200时
消费者、生产者与市场效率
4
支付意愿与需求曲线
得出需求表
P (iPod的价格)
谁会买
人名
Anthony Chad Flea John
支付意愿
$250 175 300 125
$301及以上 没人
251 – 300 Flea
176 – 250 Anthony, Flea
29
资源的市场配置
▪ 市场经济中,资源的配置是由许多分散自利的买者与卖者相互作用决定的 ▪ 市场对资源的配置是合意的吗?还存在另一个不同的配置方法能使社会更好吗? ▪ 为回答这个问题,我们使用总剩余作为衡量社会福利的指标,我们也考虑市场配置是否有效率
曼昆微观经济学课后练习英文答案(第七章)

rketsWHAT’S NEW IN THE SIXTH EDITION:There are no major changes to this chapter.LEARNING OBJECTIVES:By the end of this chapter, students should understand:the link between buyers’ willingness to pay for a good and the demand curve.how to define and measure consumer surplus.the link between sellers’ costs of producing a good and the supply curve.how to define and measure producer surplus.that the equilibrium of supply and demand maximizes total surplus in a market.CONTEXT AND PURPOSE:Chapter 7 is the first chapter in a three-chapter sequence on welfare economics and market efficiency. Chapter 7 employs the supply and demand model to develop consumer surplus and producer surplus as a measure of welfare and market efficiency. These concepts are then utilized in Chapters 8 and 9 to determine the7CONSUMERS, PRODUCERS, AND THE EFFICIENCY OF MARKETSwinners and losers from taxation and restrictions on international trade.The purpose of Chapter 7 is to develop welfare economics—the study of how the allocation of resources affects economic well-being. Chapters 4 through 6 employed supply and demand in a positive framework, which focused on the question, “What is the equilibrium price and quantity in a market?” This chapter now addresses the normative question, “Is the equ ilibrium price and quantity in a market the best possible solution to the resource allocation problem, or is it simply the price and quantity that balance supply and demand?” Students will discover that under most circumstances the equilibrium price and quantity is also the one that maximizes welfare.KEY POINTS:Consumer surplus equals buyers’ willingness to pay for a good minus the amount they actually pay for it, and it measures the benefit buyers get from participating in a market. Consumer surplus can be computed by finding the area below the demand curve and above the price.Producer surplus equals the amount sellers receive for their goods minus their costs of production, and it measures the benefit sellers get from participating in a market. Producer surplus can be computed by finding the area below the price and above the supply curve.An allocation of resources that maximizes the sum of consumer and producer surplus is said to be efficient. Policymakers are often concerned with the efficiency, as well as the equality, of economic outcomes.The equilibrium of supply and demand maximizes the sum of consumer and producer surplus. That is, the invisible hand of the marketplace leads buyers and sellers to allocate resources efficiently.Markets do not allocate resources efficiently in the presence of market failures such as market power or externalities.CHAPTER OUTLINE:I. Definition of welfare economics: the study of how the allocation of resources affects economic well-being.II. Consumer SurplusStudents often are confused by the use of the word “welfare.” Remind them that we are talking about social well-being and not public assistance.A. Willingness to Pay1. Definition of willingness to pay: the maximum amount that abuyer will pay for a good.2. Example: You are auctioning a mint-condition recording ofElvis Presley’s first album. Four buyers show up. Theirwillingness to pay is as follows:If the bidding goes to slightly higher than $80,all buyers drop out except for John. Because Johnis willing to pay more than he has to for the album,he derives some benefit from participating in themarket.3. Definition of consumer surplus: the amount a buyer iswilling to pay for a good minus the amount the buyeractually pays for it.4. Note that if you had more than one copy of the album, theover $70 in the case of two albums) and both John and Paul would gain consumer surplus.B. Using the Demand Curve to Measure Consumer Surplus1. We can use the information on willingness to pay to derivea demand curve for the rare Elvis Presley album.2. At any given quantity, the price given by the demand curvereflects the willingness to pay of the marginal buyer.Because the demand curve shows the buyers’ willingness to pay, we can use the demand curve to measure consumersurplus.Figure 23. Consumer surplus can be measured as the area below thedemand curve and above the price.C. How a Lower Price Raises Consumer SurplusFigure 31. As price falls, consumer surplus increases for two reasons.a. Those already buying the product will receive additionalconsumer surplus because they are paying less for theproduct than before (area A on the graph).b. Because the price is now lower, some new buyers willenter the market and receive consumer surplus on theseadditional units of output purchased (area B on thegraph).D. What Does Consumer Surplus Measure?1. Remember that consumer surplus is the difference between the amount that buyers are willing to pay for a good and the price that they actually pay.2. Thus, it measures the benefit that consumers receive from the good as the buyers themselves perceive it.III. Producer SurplusA. Cost and the Willingness to Sell1. Definition of cost: the value of everything a seller mustgive up to produce a good .ALTERNATIVE CLASSROOM EXAMPLE:Review the material on price ceilings from Chapter 6. Redraw the market for two-bedroom apartments in your town. Draw in a price ceiling below the equilibrium price.Then go through:▪ consumer surplus before the price ceiling is put into place. ▪ consumer surplus after the price ceiling is put into place.You will need to take some time to explain the relationship between the producers’ willingness to sell and the cost of producing the good. The relationship between cost and the supply curve is not as apparent as the relationship between the demand curve and willingness to pay.It is important to stress that consumer surplus is measured in monetary terms. Consumer surplus gives us a way to place a monetary cost on inefficient market outcomes (due to government involvement or market failure).2. Example: You want to hire someone to paint your house. Youaccept bids for the work from four sellers. Each painter is willing to work if the price you will pay exceeds heropportunity cost. (Note that this opportunity cost thusrepresents willingness to sell.) The costs are:3. Bidding will stop when the price gets to be slightly below$600. All sellers will drop out except for Grandma. Because Grandma receives more than she would require to paint the house, she derives some benefit from producing in themarket.4. Definition of producer surplus: the amount a seller is paidfor a good minus the seller’s cost of providing it.5. Note that if you had more than one house to paint, theprice in the auction would end up being higher (a little under $800 in the case of two houses) and both Grandma and Georgia would gain producer surplus.B. Using the Supply Curve to Measure Producer Surplus1. We can use the information on cost (willingness to sell) toderive a supply curve for house painting services.Price Sellers QuantitySupplied$900 ormoreMary, Frida,Georgia, Grandma4$800 to$900Frida, Georgia,Grandma3$600 to$800Georgia, Grandma2$500 to$600Grandma1less than$500None02. At any given quantity, the price given by the supply curverepresents the cost of the marginal seller. Because thesupply curve shows the sellers’ cost (willingness to sell), we can use the supply curve to measure producer surplus. Figure 4Figure 53. Producer surplus can be measured as the area above thesupply curve and below the price.C. How a Higher Price Raises Producer Surplus1. As price rises, producer surplus increases for two reasons.a. Those already selling the product will receiveadditional producer surplus because they are receivingmore for the product than before (area C on the graph).b. Because the price is now higher, some new sellers willenter the market and receive producer surplus on theseadditional units of output sold (area D on the graph).D. Producer surplus is used to measure the economic well-beingof producers, much like consumer surplus is used to measure the economic well-being of consumers.Figure 6ALTERNATIVE CLASSROOM EXAMPLE:Review the material on price floors from Chapter 6. Redraw the market for anagricultural product such as corn. Draw in a price support above the equilibriumprice.Then go through:▪ producer surplus before the price support is put in place.▪ producer surplus after the price support is put in place.IV. Market EfficiencyA. The Benevolent Social Planner1. The economic well-being of everyone in society can bemeasured by total surplus, which is the sum of consumersurplus and producer surplus:Total Surplus = Consumer Surplus + ProducerSurplusTotal Surplus = (Value to Buyers – AmountPaid by Buyers) +(Amount Received by Sellers – Cost toSellers)Because the Amount Paid by Buyers = AmountReceived bySellers:2. Definition of efficiency: the property of a resource allocation of maximizing the total surplus received by all members of society .3. Definition of equality: the property of distributingeconomic prosperity uniformly the members of society .Total Surplus = Value to Buyers Cost to SellersNow might be a good time to point out that many government policies involve a trade-off between efficiency and equity. When you evaluate government policies, like price ceilings or floors, you can explain them in terms of equity and efficiency.Pretty Woman, Chapter 6. Vivien (Julia Roberts) and Edward (Richard Gere) negotiate a price. Afterward, Vivien reveals she would have accepted a lower price, while Edward admits he would have paid more. If you have done a good job of introducing consumer and producer surplus, you will see the light bulbs go off above your students’ heads as they watch this clip.B. Evaluating the Market EquilibriumFigure 71. At the market equilibrium price:a. Buyers who value the product more than the equilibriumprice will purchase the product; those who do not, willnot purchase the product. In other words, the freemarket allocates the supply of a good to the buyers whovalue it most highly, as measured by their willingnessto pay.b. Sellers whose costs are lower than the equilibrium pricewill produce the product; those whose costs are higher,will not produce the product. In other words, the freemarket allocates the demand for goods to the sellers whocan produce it at the lowest cost.2. Total surplus is maximized at the market equilibrium.Figure 8a. At any quantity of output smaller than the equilibriumquantity, the value of the product to the marginal buyer is greater than the cost to the marginal seller so total surplus would rise if output increases.b. At any quantity of output greater than the equilibriumquantity, the value of the product to the marginal buyer is less than the cost to the marginal seller so totalsurplus would rise if output decreases.3. Note that this is one of the reasons that economistsbelieve Principle #6: Markets are usually a good way toorganize economic activity.C. In the News: Ticket Scalping1. Ticket scalping is an example of how markets work toachieve an efficient outcome.2. This article from The Boston Globe describes economist ChipCase’s experience with ticket scalping.It would be a good idea to remind students that there are circumstances when the market process does not lead to the most efficient outcome. Examples include situations such as when a firm (or buyer) has market power over price or when there are externalities present. These situations will be discussed in later chapters.D. Case Study: Should There Be a Market in Organs?1. As a matter of public policy, people are not allowed tosell their organs.a. In essence, this means that there is a price ceiling onorgans of $0.b. This has led to a shortage of organs.2. The creation of a market for organs would lead to a moreefficient allocation of resources, but critics worry aboutthe equity of a market system for organs.V. Market Efficiency and Market FailureA. To conclude that markets are efficient, we made severalassumptions about how markets worked.1. Perfectly competitive markets.2. No externalities.B. When these assumptions do not hold, the market equilibriummay not be efficient.C. When markets fail, public policy can potentially remedy thesituation.SOLUTIONS TO TEXT PROBLEMS:Quick Quizzes1. Figure 1 shows the demand curve for turkey. The price ofturkey is P1 and the consumer surplus that results fromthat price is denoted CS. Consumer surplus is the amount abuyer is willing to pay for a good minus the amount thebuyer actually pays for it. It measures the benefit to buyers of participating in a market.Figure 1 Figure 22. Figure 2 shows the supply curve for turkey. The price ofturkey is P1 and the producer surplus that results from that price is denoted PS. Producer surplus is the amount sellers are paid for a good minus the sellers’ cost of providing it (measured by the supply curve). It measures the benefit to sellers of participating in a market.Figure 33. Figure 3 shows the supply and demand for turkey. The priceof turkey is P1, consumer surplus is CS, and producersurplus is PS. Producing more turkeys than the equilibriumquantity would lower total surplus because the value to themarginal buyer would be lower than the cost to the marginalseller on those additional units.Questions for Review1. The price a buyer is willing to pay, consumer surplus, andthe demand curve are all closely related. The height of thedemand curve represents the willingness to pay of thebuyers. Consumer surplus is the area below the demand curveand above the price, which equals the price that each buyeris willing to pay minus the price actually paid.2. Sellers' costs, producer surplus, and the supply curve areall closely related. The height of the supply curverepresents the costs of the sellers. Producer surplus isthe area below the price and above the supply curve, whichequals the price received minus each seller's costs ofproducing the good.Figure 43. Figure 4 shows producer and consumer surplus in a supply-and-demand diagram.4. An allocation of resources is efficient if it maximizestotal surplus, the sum of consumer surplus and producersurplus. But efficiency may not be the only goal ofeconomic policymakers; they may also be concerned aboutequity the fairness of the distribution of well-being.5. The invisible hand of the marketplace guides the self-interest of buyers and sellers into promoting generaleconomic well-being. Despite decentralized decision makingand self-interested decision makers, free markets oftenlead to an efficient outcome.6. Two types of market failure are market power andexternalities. Market power may cause market outcomes to beinefficient because firms may cause price and quantity todiffer from the levels they would be under perfectcompetition, which keeps total surplus from being maximized.Externalities are side effects that are not taken intoaccount by buyers and sellers. As a result, the free marketdoes not maximize total surplus.Problems and Applications1. a. Consumer surplus is equal to willingness to pay minusthe price paid. Therefore, Melissa’s willingness to paymust be $200 ($120 + $80).b. Her consumer surplus at a price of $90 would be $200 −$90 = $110.c. If the price of an iPod was $250, Melissa would not havepurchased one because the price is greater than herwillingness to pay. Therefore, she would receive noconsumer surplus.2. If an early freeze in California sours the lemon crop, thesupply curve for lemons shifts to the left, as shown inFigure 5. The result is a rise in the price of lemons and adecline in consumer surplus from A + B + C to just A. Soconsumer surplus declines by the amount B + C.Figure 5 Figure 6In the market for lemonade, the higher cost of lemonsreduces the supply of lemonade, as shown in Figure 6. Theresult is a rise in the price of lemonade and a decline inconsumer surplus from D + E + F to just D, a loss of E + F.Note that an event that affects consumer surplus in onemarket often has effects on consumer surplus in othermarkets.3. A rise in the demand for French bread leads to an increasein producer surplus in the market for French bread, asshown in Figure 7. The shift of the demand curve leads to an increased price, which increases producer surplus from area A to area A + B + C.Figure 7The increased quantity of French bread being sold increases the demand for flour, as shown in Figure 8. As a result, the price of flour rises, increasing producer surplus from area D to D + E + F. Note that an event that affectsproducer surplus in one market leads to effects on producer surplus in related markets.Figure 84. a. Bert’s demand schedule is:Price QuantityDemandedMore than$7$5 to $71$3 to $52$1 to $33$1 or less4Bert’s demand curve is shown in Figure 9.Figure 9b. When the price of a bottle of water is $4, Bert buys twobottles of water. His consumer surplus is shown as areaA in the figure. He values his first bottle of water at$7, but pays only $4 for it, so has consumer surplus of $3. He values his second bottle of water at $5, but pays only $4 for it, so has consumer surplus of $1. ThusBert’s total consumer surplus is $3 + $1 = $4, which is the area of A in the figure.c. When the price of a bottle of water falls from $4 to $2,Bert buys three bottles of water, an increase of one.His consumer surplus consists of both areas A and B in the figure, an increase in the amount of area B. He gets consumer surplus of $5 from the first bottle ($7 value minus $2 price), $3 from the second bottle ($5 valueminus $2 price), and $1 from the third bottle ($3 value minus $2 price), for a total consumer surplus of $9.Thus consumer surplus rises by $5 (which is the size of area B) when the price of a bottle of water falls from $4 to $2.5. a. Ernie’s supply schedule for water is:Price Quantity SuppliedMore than$74$5 to $73$3 to $52$1 to $31Less than$1Ernie’s sup ply curve is shown in Figure 10.Figure 10b. When the price of a bottle of water is $4, Ernie sellstwo bottles of water. His producer surplus is shown as area A in the figure. He receives $4 for his firstbottle of water, but it costs only $1 to produce, soErnie has producer surplus of $3. He also receives $4 for his second bottle of water, which costs $3 toproduce, so he has producer surplus of $1. Thus Ernie’s total producer surplus is $3 + $1 = $4, which is thearea of A in the figure.c. When the price of a bottle of water rises from $4 to $6,Ernie sells three bottles of water, an increase of one.His producer surplus consists of both areas A and B inthe figure, an increase by the amount of area B. He gets producer surplus of $5 from the first bottle ($6 priceminus $1 cost), $3 from the second bottle ($6 priceminus $3 cost), and $1 from the third bottle ($6 priceminus $5 price), for a total producer surplus of $9.Thus producer surplus rises by $5 (which is the size of area B) when the price of a bottle of water rises from$4 to $6.6. a. From Ernie’s supply schedule and Bert’s demandschedule, the quantity demanded and supplied are:Only a price of $4 brings supply and demand intoequilibrium, with an equilibrium quantity of two.b. At a price of $4, consumer surplus is $4 and producersurplus is $4, as shown in Problems 3 and 4 above. Total surplus is $4 + $4 = $8.c. If Ernie produced one less bottle, his producer surpluswould decline to $3, as shown in Problem 4 above. IfBert consumed one less bottle, his consumer surpluswould decline to $3, as shown in Problem 3 above. Sototal surplus would decline to $3 + $3 = $6.d. If Ernie produced one additional bottle of water, hiscost would be $5, but the price is only $4, so hisproducer surplus would decline by $1. If Bert consumedone additional bottle of water, his value would be $3,but the price is $4, so his consumer surplus woulddecline by $1. So total surplus declines by $1 + $1 = $2.7. a. The effect of falling production costs in the market forstereos results in a shift to the right in the supplycurve, as shown in Figure 11. As a result, theequilibrium price of stereos declines and theequilibrium quantity increases.Figure 11b. The decline in the price of stereos increases consumersurplus from area A to A + B + C + D, an increase in the amount B + C + D. Prior to the shift in supply, producer surplus was areas B + E (the area above the supply curve and below the price). After the shift in supply,producer surplus is areas E + F + G. So producer surplus changes by the amount F + G – B, which may be positiveor negative. The increase in quantity increases producer surplus, while the decline in the price reduces producer surplus. Because consumer surplus rises by B + C + D andproducer surplus rises by F + G – B, total surplusrises by C + D + F + G.c. If the supply of stereos is very elastic, then the shiftof the supply curve benefits consumers most. To take the most dramatic case, suppose the supply curve werehorizontal, as shown in Figure 12. Then there is noproducer surplus at all. Consumers capture all thebenefits of falling production costs, with consumersurplus rising from area A to area A + B.Figure 128. Figure 13 shows supply and demand curves for haircuts.Supply equals demand at a quantity of three haircuts and a price between $4 and $5. Firms A, C, and D should cut the hair of Ellen, Jerry, and Phil. Oprah’s willingness to pay is t oo low and firm B’s costs are too high, so they do not participate. The maximum total surplus is the area between the demand and supply curves, which totals $11 ($8 value minus $2 cost for the first haircut, plus $7 value minus $3cost for the second, plus $5 value minus $4 cost for the third).Figure 139. a. The effect of falling production costs in the market forcomputers results in a shift to the right in the supply curve, as shown in Figure 14. As a result, theequilibrium price of computers declines and theequilibrium quantity increases. The decline in the price of computers increases consumer surplus from area A to A + B + C + D, an increase in the amount B + C + D.Figure 14 Figure 15Prior to the shift in supply, producer surplus was areasB + E (the area above the supply curve and below theprice). After the shift in supply, producer surplus isareas E + F + G. So producer surplus changes by theamount F + G – B, which may be positive or negative.The increase in quantity increases producer surplus,while the decline in the price reduces producer surplus.Because consumer surplus rises by B + C + D and producersurplus rises by F + G – B, total surplus rises by C +D + F + G.b. Because typewriters are substitutes for computers, thedecline in the price of computers means that peoplesubstitute computers for typewriters, shifting thedemand for typewriters to the left, as shown in Figure15. The result is a decline in both the equilibriumprice and equilibrium quantity of typewriters. Consumersurplus in the typewriter market changes from area A + Bto A + C, a net change of C – B. Producer surpluschanges from area C + D + E to area E, a net loss of C +D. Typewriter producers are sad about technologicaladvances in computers because their producer surplusdeclines.c. Because software and computers are complements, thedecline in the price and increase in the quantity ofcomputers means that the demand for software increases,shifting the demand for software to the right, as shownin Figure 16. The result is an increase in both theprice and quantity of software. Consumer surplus in thesoftware market changes from B + C to A + B, a netchange of A – C. Producer surplus changes from E to C +D + E, an increase of C + D, so software producersshould be happy about the technological progress incomputers.Figure 16d. Yes, this analysis helps explain why Bill Gates is onethe world’s richest people, because his companyproduces a lot of software that is a complement withcomputers and there has been tremendous technologicaladvance in computers.10. a. With Provider A, the cost of an extra minute is $0.With Provider B, the cost of an extra minute is $1.b. With Provider A, my friend will purchase 150 minutes [=150 – (50)(0)]. With Provider B, my friend wouldpurchase 100 minutes [= 150 – (50)(1)].c. With Provider A, he would pay $120. The cost would be $100 with Provider B.Figure 17d. Figure 17 shows the friend’s demand. With Provider A,he buys 150 minutes and his consumer surplus is equal to(1/2)(3)(150) – 120 = 105. With Provider B, hisconsumer surplus is equal to (1/2)(2)(100) = 100.e. I would recommend Provider A because he receives greater consumer surplus.11. a. Figure 18 illustrates the demand for medical care.If each procedure has a price of $100, quantity demandedwill be Q1 procedures.曼昆微观经济学课后练习英文答案(第七章)Figure 18b. If consumers pay only $20 per procedure, the quantitydemanded will be Q2 procedures. Because the cost tosociety is $100, the number of procedures performed istoo large to maximize total surplus. The quantity thatmaximizes total surplus is Q1 procedures, which is lessthan Q2.c. The use of medical care is excessive in the sense thatconsumers get procedures whose value is less than thecost of producing them. As a result, the economy’stotal surplus is reduced.d. To prevent this excessive use, the consumer must bearthe marginal cost of the procedure. But this wouldrequire eliminating insurance. Another possibility wouldbe that the insurance company, which pays most of themarginal cost of the procedure ($80, in this case) coulddecide whether the procedure should be performed. Butthe insurance company does not get the benefits of theprocedure, so its decisions may not reflect the value tothe consumer.151 / 31© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.。
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rketsWHAT’S NEW IN THE SIXTH EDITION:There are no major changes to this chapter.LEARNING OBJECTIVES:By the end of this chapter, students should understand:the link between buyers’ willingness to pay for a good and the demand curve.how to define and measure consumer surplus.the link between sellers’ costs of producing a good and the supply curve.how to define and measure producer surplus.that the equilibrium of supply and demand maximizes total surplus in a market.CONTEXT AND PURPOSE:Chapter 7 is the first chapter in a three-chapter sequence on welfare economics and market efficiency. Chapter 7 employs the supply and demand model to develop consumer surplus and producer surplus as a measure of welfare and market efficiency. These concepts are then7CONSUMERS, PRODUCERS, AND THEEFFICIENCY OF MARKETSutilized in Chapters 8 and 9 to determine the winners and losers from taxation and restrictions on international trade.The purpose of Chapter 7 is to develop welfare economics—the study of how the allocation of resources affects economic well-being. Chapters 4 through 6 employed supply and demand in a positive framework, which focused on the question, “What is the equilibrium price and quantity in a market” This chapter now addresses the normative question, “Is the equilibrium price and quantity in a market the best possible solution to the resource allocation problem, or is it simply the price and quantity that balance supply and demand” Students will discover that under most circumstances the equilibrium price and quantity is also the one that maximizes welfare.KEY POINTS:Consumer surplus equals buyers’ willingness to pay for a good minus the amount they actually pay for it, and it measures the benefit buyers get from participating in a market.Consumer surplus can be computed by finding the area below the demand curve and above the price.Producer surplus equals the amount sellers receive for their goods minus their costs of production, and it measures the benefit sellers get from participating in a market.Producer surplus can be computed by finding the area below the price and above the supply curve.An allocation of resources that maximizes the sum of consumer and producer surplus is said to be efficient. Policymakers are often concerned with the efficiency, as well as the equality, of economic outcomes.The equilibrium of supply and demand maximizes the sum of consumer and producer surplus.That is, the invisible hand of the marketplace leads buyers and sellers to allocate resources efficiently.Markets do not allocate resources efficiently in the presence of market failures such as market power or externalities.CHAPTER OUTLINE:I. Definition of welfare economics: the study of how the allocation of resources affectseconomic well-being.Students often are confused by the use of the word “welfare.” Remind themthat we are talking about social well-being and not public assistance.II. Consumer SurplusA. Willingness to Pay1. Definition of willingness to pay: the maximum amount that a buyer will pay for agood.2. Example: You are auctioning a mint-condition recording of Elvis Presley’s firstalbum. Four buyers show up. Their willingness to pay is as follows:If the bidding goes to slightly higher than $80, all buyers drop outexcept for John. Because John is willing to pay more than he has to forthe album, he derives some benefit from participating in the market.3. Definition of consumer surplus: the amount a buyer is willing to pay for a goodminus the amount the buyer actually pays for it.4. Note that if you had more than one copy of the album, the price in the auctionJohn and Paul would gain consumer surplus.B. Using the Demand Curve to Measure Consumer Surplus1. We can use the information on willingness to pay to derive a demand curve for therare Elvis Presley album.2. At any given quantity, the price given by the demand curve reflects thewillingness to pay of the marginal buyer. Because the demand curve shows the buyers’ willingness to pay, we can use the demand curve to measure consumer surplus.Figure 23. Consumer surplus can be measured as the area below the demand curve and above theprice.C. How a Lower Price Raises Consumer SurplusFigure 31. As price falls, consumer surplus increases for two reasons.a. Those already buying the product will receive additional consumer surplusbecause they are paying less for the product than before (area A on the graph).b. Because the price is now lower, some new buyers will enter the market andreceive consumer surplus on these additional units of output purchased (area Bon the graph).D. What Does Consumer Surplus MeasureIt is important to stress that consumer surplus is measured in monetaryterms. Consumer surplus gives us a way to place a monetary cost on1. Remember that consumer surplus is the difference between the amount that buyersare willing to pay for a good and the price that they actually pay.2. Thus, it measures the benefit that consumers receive from the good as the buyersthemselves perceive it.ALTERNATIVE CLASSROOM EXAMPLE:Review the material on price ceilings from Chapter 6. Redraw the market for two-bedroom apartments in your town. Draw in a price ceiling below the equilibriumprice.III. Producer SurplusA. Cost and the Willingness to Sell1. Definition of cost: the value of everything a seller must give up to produce agood.You will need to take some time to explain the relationship between theproducers’ willingness to sell and the cost of producing the good. Therelationship between cost and the supply curve is not as apparent as the2. Example: You want to hire someone to paint your house. You accept bids for thework from four sellers. Each painter is willing to work if the price you will pay exceeds her opportunity cost. (Note that this opportunity cost thus represents willingness to sell.) The costs are:3. Bidding will stop when the price gets to be slightly below $600. All sellers willdrop out except for Grandma. Because Grandma receives more than she would require to paint the house, she derives some benefit from producing in the market.4. Definition of producer surplus: the amount a seller is paid for a good minus theseller’s cost of providing it.5. Note that if you had more than one house to paint, the price in the auction wouldend up being higher (a little under $800 in the case of two houses) and both Grandma and Georgia would gain producer surplus.B. Using the Supply Curve to Measure Producer Surplus1. We can use the information on cost (willingness to sell) to derive a supply curvefor house painting services.Price Sellers Quantity Supplied$900 or more Mary, Frida, Georgia, Grandma4$800 to $900Frida, Georgia, Grandma3$600 to $800Georgia, Grandma2$500 to $600Grandma1less than $500None02. At any given quantity, the price given by the supply curve represents the cost ofthe marginal seller. Because the supply curve shows the sellers’ cost (willingness to sell), we can use the supply curve to measure producer surplus.3. Producer surplus can be measured as the area above the supply curve and below theprice.Figure 4Figure 5C. How a Higher Price Raises Producer Surplus1. As price rises, producer surplus increases for two reasons.a. Those already selling the product will receive additional producer surplusbecause they are receiving more for the product than before (area C on thegraph).b. Because the price is now higher, some new sellers will enter the market andreceive producer surplus on these additional units of output sold (area D onthe graph).D. Producer surplus is used to measure the economic well-being of producers, much like Figure 6ALTERNATIVE CLASSROOM EXAMPLE:Review the material on price floors from Chapter 6. Redraw the market for an agricultural product such as corn. Draw in a price support above the equilibriumprice.Then go through:IV. Market EfficiencyA. The Benevolent Social Planner1. The economic well-being of everyone in society can be measured by total surplus,which is the sum of consumer surplus and producer surplus:Total Surplus = Consumer Surplus + Producer SurplusTotal Surplus = (Value to Buyers – Amount Paid by Buyers) + (Amount Received by Sellers – Cost to Sellers)Because the Amount Paid by Buyers = Amount Received by Sellers:2. Definition of efficiency: the property of a resource allocation of maximizing thetotal surplus received by all members of society .3. Definition of equality: the property of distributing economic prosperity uniformlythe members of society .B. Evaluating the Market EquilibriumTotal Surplus = Value to Buyers Cost to SellersFigure 7Now might be a good time to point out that many government policies involvea trade-off between efficiency and equity. When you evaluate government Pretty Woman, Chapter 6. Vivien (Julia Roberts) and Edward (Richard Gere)negotiate a price. Afterward, Vivien reveals she would have accepted a lower price, while Edward admits he would have paid more. If you have done a good job of introducing consumer and producer surplus, you will see the1. At the market equilibrium price:a. Buyers who value the product more than the equilibrium price will purchase theproduct; those who do not, will not purchase the product. In other words, thefree market allocates the supply of a good to the buyers who value it mosthighly, as measured by their willingness to pay.b. Sellers whose costs are lower than the equilibrium price will produce theproduct; those whose costs are higher, will not produce the product. In otherwords, the free market allocates the demand for goods to the sellers who canproduce it at the lowest cost.2. Total surplus is maximized at the market equilibrium.Figure 8a. At any quantity of output smaller than the equilibrium quantity, the value ofthe product to the marginal buyer is greater than the cost to the marginalseller so total surplus would rise if output increases.b. At any quantity of output greater than the equilibrium quantity, the value ofthe product to the marginal buyer is less than the cost to the marginal sellerso total surplus would rise if output decreases.3. Note that this is one of the reasons that economists believe Principle #6: Marketsare usually a good way to organize economic activity.It would be a good idea to remind students that there are circumstanceswhen the market process does not lead to the most efficient outcome.Examples include situations such as when a firm (or buyer) has market powerC. In the News: Ticket Scalping1. Ticket scalping is an example of how markets work to achieve an efficient outcome.2. This article from The Boston Globe describes economist Chip Case’s experiencewith ticket scalping.D. Case Study: Should There Be a Market in Organs1. As a matter of public policy, people are not allowed to sell their organs.a. In essence, this means that there is a price ceiling on organs of $0.b. This has led to a shortage of organs.2. The creation of a market for organs would lead to a more efficient allocation ofresources, but critics worry about the equity of a market system for organs.V. Market Efficiency and Market FailureA. To conclude that markets are efficient, we made several assumptions about how marketsworked.1. Perfectly competitive markets.2. No externalities.B. When these assumptions do not hold, the market equilibrium may not be efficient.C. When markets fail, public policy can potentially remedy the situation.SOLUTIONS TO TEXT PROBLEMS:Quick Quizzes1. Figure 1 shows the demand curve for turkey. The price of turkey is P1and theconsumer surplus that results from that price is denoted CS. Consumer surplus isthe amount a buyer is willing to pay for a good minus the amount the buyeractually pays for it. It measures the benefit to buyers of participating in amarket.Figure 1 Figure 22. Figure 2 shows the supply curve for turkey. The price of turkey is P1and theproducer surplus that results from that price is denoted PS. Producer surplus isthe amount sellers are paid for a good minus the sellers’ cost of providing it(measured by the supply curve). It measures the benefit to sellers ofparticipating in a market.Figure 33. Figure 3 shows the supply and demand for turkey. The price of turkey is P1,consumer surplus is CS, and producer surplus is PS. Producing more turkeys thanthe equilibrium quantity would lower total surplus because the value to themarginal buyer would be lower than the cost to the marginal seller on thoseadditional units.Questions for Review1. The price a buyer is willing to pay, consumer surplus, and the demand curve areall closely related. The height of the demand curve represents the willingness topay of the buyers. Consumer surplus is the area below the demand curve and abovethe price, which equals the price that each buyer is willing to pay minus theprice actually paid.2. Sellers' costs, producer surplus, and the supply curve are all closely related.The height of the supply curve represents the costs of the sellers. Producersurplus is the area below the price and above the supply curve, which equals theprice received minus each seller's costs of producing the good.Figure 43. Figure 4 shows producer and consumer surplus in a supply-and-demand diagram.4. An allocation of resources is efficient if it maximizes total surplus, the sum ofconsumer surplus and producer surplus. But efficiency may not be the only goal ofeconomic policymakers; they may also be concerned about equity the fairness ofthe distribution of well-being.5. The invisible hand of the marketplace guides the self-interest of buyers andsellers into promoting general economic well-being. Despite decentralized decisionmaking and self-interested decision makers, free markets often lead to anefficient outcome.6. Two types of market failure are market power and externalities. Market power maycause market outcomes to be inefficient because firms may cause price and quantityto differ from the levels they would be under perfect competition, which keepstotal surplus from being maximized. Externalities are side effects that are nottaken into account by buyers and sellers. As a result, the free market does notmaximize total surplus.Problems and Applications1. a. Consumer surplus is equal to willingness to pay minus the price paid.Therefore, Melissa’s willingness to pay must be $200 ($120 + $80).b. Her consumer surplus at a price of $90 would be $200 − $90 = $110.c. If the price of an iPod was $250, Melissa would not have purchased one becausethe price is greater than her willingness to pay. Therefore, she would receiveno consumer surplus.2. If an early freeze in California sours the lemon crop, the supply curve for lemonsshifts to the left, as shown in Figure 5. The result is a rise in the price oflemons and a decline in consumer surplus from A + B + C to just A. So consumersurplus declines by the amount B + C.Figure 5 Figure 6In the market for lemonade, the higher cost of lemons reduces the supply oflemonade, as shown in Figure 6. The result is a rise in the price of lemonade anda decline in consumer surplus from D + E + F to just D, a loss of E + F. Note thatan event that affects consumer surplus in one market often has effects on consumersurplus in other markets.3. A rise in the demand for French bread leads to an increase in producer surplus inthe market for French bread, as shown in Figure 7. The shift of the demand curveleads to an increased price, which increases producer surplus from area A to areaA +B + C.Figure 7The increased quantity of French bread being sold increases the demand for flour,as shown in Figure 8. As a result, the price of flour rises, increasing producersurplus from area D to D + E + F. Note that an event that affects producer surplusin one market leads to effects on producer surplus in related markets.Figure 84. a. Bert’s demand schedule is:Price Quantity DemandedMore than $70$5 to $71$3 to $52$1 to $33$1 or less4Bert’s demand curve is shown in Figure 9.Figure 9b. When the price of a bottle of water is $4, Bert buys two bottles of water. Hisconsumer surplus is shown as area A in the figure. He values his first bottleof water at $7, but pays only $4 for it, so has consumer surplus of $3. Hevalues his second bottle of water at $5, but pays only $4 for it, so hasconsumer surplus of $1. Thus Bert’s total consumer surplus is$3 + $1 = $4,which is the area of A in the figure.c. When the price of a bottle of water falls from $4 to $2, Bert buys threebottles of water, an increase of one. His consumer surplus consists of bothareas A and B in the figure, an increase in the amount of area B. He getsconsumer surplus of $5 from the first bottle ($7 value minus $2 price), $3 fromthe second bottle ($5 value minus $2 price), and $1 from the third bottle ($3value minus $2 price), for a total consumer surplus of $9. Thus consumersurplus rises by $5 (which is the size of area B) when the price of a bottle ofwater falls from $4 to $2.5. a. Ernie’s supply schedule for water is:Price Quantity SuppliedMore than $74$5 to $73$3 to $52$1 to $31Less than $10Ernie’s su pply curve is shown in Figure 10.Figure 10b. When the price of a bottle of water is $4, Ernie sells two bottles of water.His producer surplus is shown as area A in the figure. He receives $4 for his first bottle of water, but it costs only $1 to produce, so Ernie has producer surplus of $3. He also receives $4 for his second bottle of water, which costs $3 to produce, so he has producer surplus of $1. Thus Ernie’s total producer surplus is $3 + $1 = $4, which is the area of A in the figure.c. When the price of a bottle of water rises from $4 to $6, Ernie sells threebottles of water, an increase of one. His producer surplus consists of bothareas A and B in the figure, an increase by the amount of area B. He gets producer surplus of $5 from the first bottle ($6 price minus $1 cost), $3 from the second bottle ($6 price minus $3 cost), and $1 from the third bottle ($6 price minus $5 price), for a total producer surplus of $9. Thus producer surplus rises by $5 (which is the size of area B) when the price of a bottle of water rises from $4 to $6.6. a. From Ernie’s supply schedule and Bert’s demand schedule, the quantitydemanded and supplied are:Only a price of $4 brings supply and demand into equilibrium, with an equilibrium quantity of two.b. At a price of $4, consumer surplus is $4 and producer surplus is $4, as shownin Problems 3 and 4 above. Total surplus is $4 + $4 = $8.c. If Ernie produced one less bottle, his producer surplus would decline to $3, asshown in Problem 4 above. If Bert consumed one less bottle, his consumer surplus would decline to $3, as shown in Problem 3 above. So total surplus would decline to $3 + $3 = $6.d. If Ernie produced one additional bottle of water, his cost would be $5, but theprice is only $4, so his producer surplus would decline by $1. If Bert consumed one additional bottle of water, his value would be $3, but the price is $4, so his consumer surplus would decline by $1. So total surplus declines by $1 + $1 = $2.7. a. The effect of falling production costs in the market for stereos results in ashift to the right in the supply curve, as shown in Figure 11. As a result, theequilibrium price of stereos declines and the equilibrium quantity increases.Figure 11b. The decline in the price of stereos increases consumer surplus from area A to A+ B + C + D, an increase in the amount B + C + D. Prior to the shift in supply,producer surplus was areas B + E (the area above the supply curve and below theprice). After the shift in supply, producer surplus is areas E + F + G. Soproducer surplus changes by the amount F + G –B, which may be positive ornegative. The increase in quantity increases producer surplus, while thedecline in the price reduces producer surplus. Because consumer surplus risesby B + C + D and producer surplus rises by F + G – B, total surplus rises by C+ D + F + G.c. If the supply of stereos is very elastic, then the shift of the supply curvebenefits consumers most. To take the most dramatic case, suppose the supplycurve were horizontal, as shown in Figure 12. Then there is no producer surplusat all. Consumers capture all the benefits of falling production costs, withconsumer surplus rising from area A to area A + B.Figure 128. Figure 13 shows supply and demand curves for haircuts. Supply equals demand at aquantity of three haircuts and a price between $4 and $5. Firms A, C, and D shouldcut the hair of Ellen, Jerry, and Phil. Oprah’s willingness to pay is too low andfirm B’s costs are too high, so they do not participate. The maximum totalsurplus is the area between the demand and supply curves, which totals $11 ($8value minus $2 cost for the first haircut, plus $7 value minus $3 cost for thesecond, plus $5 value minus $4 cost for the third).Figure 139. a. The effect of falling production costs in the market for computers results in ashift to the right in the supply curve, as shown in Figure 14. As a result, theequilibrium price of computers declines and the equilibrium quantity increases.The decline in the price of computers increases consumer surplus from area A toA +B +C + D, an increase in the amount B + C + D.Figure 14 Figure 15Prior to the shift in supply, producer surplus was areas B + E (the area abovethe supply curve and below the price). After the shift in supply, producersurplus is areas E + F + G. So producer surplus changes by the amount F + G –B, which may be positive or negative. The increase in quantity increases producer surplus, while the decline in the price reduces producer surplus.Because consumer surplus rises by B + C + D and producer surplus rises by F + G – B, total surplus rises by C + D + F + G.b. Because typewriters are substitutes for computers, the decline in the price ofcomputers means that people substitute computers for typewriters, shifting the demand for typewriters to the left, as shown in Figure 15. The result is a decline in both the equilibrium price and equilibrium quantity of typewriters.Consumer surplus in the typewriter market changes from area A + B to A + C, a net change of C – B. Producer surplus changes from area C + D + E to area E, a net loss of C + D. Typewriter producers are sad about technological advances in computers because their producer surplus declines.c. Because software and computers are complements, the decline in the price andincrease in the quantity of computers means that the demand for softwareincreases, shifting the demand for software to the right, as shown in Figure 16.The result is an increase in both the price and quantity of software. Consumersurplus in the software market changes from B + C to A + B, a net change of A– C. Producer surplus changes from E to C + D + E, an increase of C + D, sosoftware producers should be happy about the technological progress incomputers.Figure 16d. Yes, this analysis helps explain why Bill Gates is one the world’s richestpeople, because his company produces a lot of software that is a complementwith computers and there has been tremendous technological advance in computers.10. a. With Provider A, the cost of an extra minute is $0. With Provider B, the costof an extra minute is $1.b. With Provider A, my friend will purchase 150 minutes [= 150 – (50)(0)]. WithProvider B, my friend would purchase 100 minutes [= 150 – (50)(1)].c. With Provider A, he would pay $120. The cost would be $100 with Provider B.Figure 17d. Figure 17 shows the friend’s demand. With Provider A, he buys 150 minutes andhis consumer surplus is equal to (1/2)(3)(150) – 120 = 105. With Provider B,his consumer surplus is equal to (1/2)(2)(100) = 100.e. I would recommend Provider A because he receives greater consumer surplus.11. a. Figure 18 illustrates the demand for medical care. If each procedure has aprice of $100, quantity demanded will be Q1 procedures.Figure 18b. If consumers pay only $20 per procedure, the quantity demanded will be Q2procedures. Because the cost to society is $100, the number of proceduresperformed is too large to maximize total surplus. The quantity that maximizestotal surplus is Q1 procedures, which is less than Q2.c. The use of medical care is excessive in the sense that consumers get procedureswhose value is less than the cost of producing them. As a result, theeconomy’s total surplus is reduced.d. To prevent this excessive use, the consumer must bear the marginal cost of theprocedure. But this would require eliminating insurance. Another possibilitywould be that the insurance company, which pays most of the marginal cost ofthe procedure ($80, in this case) could decide whether the procedure should beperformed. But the insurance company does not get the benefits of the procedure,so its decisions may not reflect the value to the consumer.。