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Author Question: Can both producer surplus and consumer surplus exist at the same time in a particular market? ... (Read 265 times)

jc611

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on: Jun 29, 2018
Can both producer surplus and consumer surplus exist at the same time in a particular market?
 
  What will be an ideal response?

Question 2

Redbox rents DVDs for 1 per day via self-service kiosks located across the United States. In 2007, each kiosk averaged about 50 rentals per day. Suppose Redbox increases their daily price to 1.50.
 
  What is the price elasticity of demand if rentals decrease by 20 per day? A) 1.25
  B) 1.33
  C) 1
  D) 0.8


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Tabitha_2016

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Yes. The actual price can be above the seller's marginal cost and below the buyer's maximum purchase price. So, buyer and seller can both earn a surplus on the same transaction.

Answer to Question 2

A


jc611

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Reply 2 on: Jun 29, 2018
Gracias!

sultansheikh

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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