If an input in automobile tires used? eggshells, tomato? skins, and other food w
ID: 1158790 • Letter: I
Question
If an input in automobile tires used? eggshells, tomato? skins, and other food waste that reduced the cost to make tires then the redued cost would have an effect on consumer surplus.??
Using the? graph, the following areas would show the resulting consumer surplus after the reduction in input? costs:
a.??
A.)?A, B,? C, D,? E, F, G.
B.)A, B,? C, D,? E, F,? G, H, I.
C.)?A, B, C.
D.)?A, B,? C, E.
b. These falling costs result in a loss of producer surplus equal to areas
A.)?D, F, G.
B.)?D, E,? F, G,? H, I.
C.)?F, G,? H, I.
D.)?G, H, I.
There is a gain of producer surplus equal to areas
A.)?F, G,? H, I,? J, K.
B.)?J, L, K.
C.)?H, I, K.
D.)?K, L, M.
The actual net change in producer surplus
A.)depends on the actual size of the loss and gain.
B.)is negative.
Market for Tires 0 QuantityExplanation / Answer
a) A total gain in the consumer surplus area due to a fall in the input price is "B", A+B+C+D+E+F+G+H+I. The consumer surplus is the area below the demand curve and above the price level. The answer is "B".
b) "A", D+F+G
These Falling cost result in a loss of the producer surplus equal to the are DFG.
c) "D"
The gain in the area of producer surplus is equal to MKL. The answer is "D".
d) "A"
The total gain depends on the actual size of the loss and the gain. We will need more information to count it.