Question

In the days when the epidemic started, the price of the mask, which is normally $ 0.25 , has climbed up to $ 8 in the market. In this period, on average, a mask found buyers in the market for $ 4.
Mask supply and demand functions
Q^d = a - bP
Q^s = -c + dP
Q^d = Q^s
Let's assume that it is. Here you can choose the numerical values of the a, b, c, d parameters to solve the problem. When making solutions, use them parametrically.

a)Using the above information, plot the supply and demand functions for the mask market. Show consumer and producer surplus values on the chart.

b)If the mask price is $ 6, write the consumer and producer residual value using the integral. (calculation is not required.)

c)The Ministry of Health has announced the mask price as $ 1. According to this explanation, write the residual value of the producer and consumer using Integral. (calculation is not required)

Answer 1

CONSUMER SURPLUS: DIFFERENCE BETWEE WHAT A CONSUMER EXPECTS TO PAY AND WHAT HE ACTUALLY PAYS.

PRODUCERS SURPLUS: DIFFERENCE BETWEEN WHAT A SELLER EXPECTS TO SELL A GOOD AND THE PRICE HE ACTUALLY RECIEVES. THE AREAS ARE SHOWN IN THE FIGURE BELOW

IMAGE1

IMAGE 2

IMAGE 3

RESIDUAL IN BOTH CASES, FOR PRODUCER SURPLUS IS POSITIVE SINCE A HIGHER PRICE WILL ALWAYS GIVE SELLER A GREATER SURPLUS. AND FOR CONSUMER SURPLUS IT IS NEGATIVE SINCE A GREATER PRICE WILL ALWAYS LEAVE CONSUMER WITH LESSER SURPLUS.