Compute consumer surplus-producer surplus

Assignment Help Business Economics
Reference no: EM132592887

University of Maryland has a limited number (600) of parking spaces for faculty use. If the market were used to allocate the 600 spaces, the equilibrium price would be $600 per year. Furthermore, UMD believes that at a price of $0, faculty would demand 1500 spots.

a) Compute consumer surplus, producer surplus, and total surplus if UMD sells the spaces for $600 each. (Hint: draw a graph and assume the supply for spaces is constant. Consider UMD to be a producer)

b) Suppose that UMD sells the spaces for $400 each and that UMD is able to allocate the spaces to those faculty who value them most. Compute consumer surplus, producer surplus, and total surplus in this case.

c) Suppose, instead, that UMD sells the spaces for $400 each but now uses a lottery to determine which faculty will get a spot. Compute consumer surplus, producer surplus, and total surplus in this case. (Hint: how many people will enter the lottery? You can then calculate ratio of people who will win the lottery. Then multiply this ratio by surplus if all lottery participants would get a parking spot)

d) Why are answers to b) and c) different?

Reference no: EM132592887

Questions Cloud

Describe the disaster preparedness steps : Identify a disaster scenario, outline the disaster preparedness steps that should be used, and relate them to the nursing process. The response must be typed.
Discuss the elements of informed consent : Discuss the elements of informed consent and provide a clinical example about what can happen when some elements are not adhered to.
Dollar value of the impact of the policy on employers : Consider a low-wage labor market. Workers in this market are not presently covered by the minimum wage, but the government is considering implementing
What is rick distributive share of income and gain : What partnership income, gain, and loss should Rick report on his tax return for the current year?What is Rick's distributive share of income, gain
Compute consumer surplus-producer surplus : Compute consumer surplus, producer surplus, and total surplus if UMD sells the spaces for $600 each. (Hint: draw a graph and assume the supply for spaces
Provide the journal entry in excel for the transactions : Provide the journal entry in EXCEL (if applicable) for the transactions listed below. If a journal entry is not required, write DOES NOT APPLY.
Explain what risk management processes can be utilized : Describe potential risks associated with this project, and explain what risk management processes can be utilized.
Describe the clinical situation concisely and descriptively : Describe the clinical situation concisely and descriptively. It can be an actual situation or a hypothetical one. Apply the Bioethical Decision Making Model.
What is equilibrium level of output : We will consider a closed economy, no exports or imports. In this economy: autonomous consumption is $3 trillion

Reviews

Write a Review

Business Economics Questions & Answers

  Describe the relationship of race-class and gender

Describe the relationship of race, class, and gender and its effect on health and mental care delivery in the United States. What steps could be taken to guarantee that all have the same access to the appropriate health care? Should funds be made ava..

  What happens to the equilibrium price and quantity in market

How does the drought impact the market for "high-value forage"? What happens to the equilibrium price and quantity in market?

  The supply-side effects of tax cut arise because taxes act

The supply-side effects of a tax cut arise because taxes act as (a stimulus/an incentive/a disincentive) to work, save, and provide entrepreneurial services. The supply-side from from an increase in government expenditure arise because government exp..

  Rba were to implement a simple rule

Suppose the RBA were to implement a simple rule for monetary policy, such as one that makes the monetary aggregate M3 rise at a steady rate of 3% per year. When would this rule work and when would problems occur with such a rule?

  Calculate the relevant cash flows for the evaluation

a) Calculate the relevant cash flows for the evaluation of this project. b) Decide whether Carla should invest in this production line or not.

  Develop an understanding of the market structure

Develop an understanding of the market structure known as perfect competition. Write a 3-4 page paper in which you describe the market structure of perfect competition in terms of number of producers, control over price by firms in this market, type ..

  The government adopted capital budgeting

On April 1, 1996, Taco Bell, the fast-food chain, ran a full-page ad in the New York Times with this news: "In an effort to help the national debt, Taco Bell is pleased to announce that we have agreed to purchase the Liberty Bell, one of our country'..

  What is inflation what are the causes of inflation

What is inflation? What are the causes of inflation?  Is inflation desirable and what can be done to control inflation in a market economy? What is the Consumer Price Index (CPI)?  How has the CPI behaved since the year 2000?  What have been the caus..

  Use period for the decimal separator

Individuals A and B are the only consumers of good X. Individual A demand for good X is given by: Q = 4 – P and individual B demand for good X is given by: Q = 8 – 2P. The supply for good X is given by MC = 3. Assume good X is a (pure) public good. G..

  International trade has pros and cons

International trade has pros and cons. Economists generally supports free trade. International trade has played a significant part in promoting economic development and technology transfer among countries. There are also various arguments in favour o..

  What is the weekly marginal product of practical nurse

The consultants of Allcare Family Clinic (AFC) have determined that if the clinic hires two more practical nurses, without any other changes in its operation, it can increase the number of patients it treats during a week from 200 to 230. The weekly ..

  Describe money during a hyperinflation

Why have some economists describe money during a hyperinflation as a hot potato that quiklt passed from one person to another

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd