Each firm can produce at most one car. Suppose the market for electric cars is competitive. Why is the equilibrium price in this market $5050 ,000? A. At this price, three consumers are willing to buy an electric car and three firms are willing to sell an electric car. B. At this price, the quantity demanded (three cars) equals the quantity supplied (three cars). C. At $5050 ,000, three consumers have reservation values equal to or above $5050 ,000 and three firms have reservation values equal to or below $5050 ,000. D. All of the above.

Question

Hope Spears

Business

29 July, 07:00

Each firm can produce at most one car. Suppose the market for electric cars is competitive. Why is the equilibrium price in this market $5050 ,000? A. At this price, three consumers are willing to buy an electric car and three firms are willing to sell an electric car. B. At this price, the quantity demanded (three cars) equals the quantity supplied (three cars). C. At $5050 ,000, three consumers have reservation values equal to or above $5050 ,000 and three firms have reservation values equal to or below $5050 ,000. D. All of the above.

+2

Answers (1)

Know the Answer?

Kassidy Dougherty · Answer 1

Consumer surplus = (60000 - 40000) + (90000 - 40000) + (40000 - 40000) = $70000

Producer surplus = (40000 - 20000) + (40000 - 30000) + (40000 - 40000) = $30000

Social surplus = Consumer surplus + Producer Surplus = 70000 + 30000 = $100000

Consumer surplus = (Willingness to pay - Price)

Producer surplus = (Price - Cost)