Download More Consumer and Producer Surplus Practice

More Consumer and Producer Surplus Practice
Consumer Surplus
I’m selling bags of candy in class. Below is the demand schedule for candy (assume I asked everyone for
this information):
Price
$10
8
6
4
2
1
0
Quantity
5
12
20
25
29
32
35
1. Suppose the market price of candy is $4.
a. How many people would buy candy?
b. Calculate total consumer surplus when the price of candy is $4.
2. Suppose the market price decreases to $2.
a. How many people would buy candy now?
b. Calculate total consumer surplus when the price of candy is $2.
Producer Surplus
Imagine a business that produces ceramic pigeons (hey, maybe someone likes that sort of thing). Their
supply schedule is below:
Price
$50
45
40
35
30
25
20
Quantity
100
80
68
58
45
32
25
1. Suppose the market price of ceramic pigeons is $35.
a. How many pigeons would be sold?
b. Calculate the total producer surplus when the price of pigeons is $35.
2. Suppose the market price increases to $40.
a. How many pigeons would now be sold?
b. Calculate the total producer surplus when the price of pigeons is $40.