Explain Consumer Surplus and Producer Surplus: Microeconomics Assignment, OUM, Malaysia
- Explain consumer surplus and producer surplus.
- Illustrate the effects on consumer surplus and producer surplus when the price is below the equilibrium price using suitable graphs.
Table 1 shows the quantity and price that form a monopolist’s demand curve.
|Total Revenue (TR)||Marginal Revenue|
- Based on Table 1, fill up the columns of Total Revenue (TR), Marginal Revenue (MR), Marginal Cost (MC), and Total Profit. (Prepare your answers in the form of a table).
- What is the value of fixed costs for this firm?
- Determine the level of output that maximises the monopolist’s total profit.
- Define Price–Consumption Curve (PCC) and Income-Consumption Curve (ICC).
- illustrate the curves that can be derived from PCC and ICC. Explain.
Assume price (P) = RM15, quantity (Q) = 12 units, average variable cost (AVC) = RM8 and average cost (AC) = RM10. This firm operates in perfectly competitive market.
- a) What is the formula for profit? b) Calculate total cost (TC).
- Calculate the total revenue (TR).
- Calculate the economic profit of the firm.
- Shade the area that represents the economic profit of the firm.