Given the following diagrams: Q1 = 20 bags. Q2 = 15 bags. Q3 = 27 bags. The market equilibrium price point b is $50 per bag.
The price at point a is $110 and the price at point c is $10 per bag. The price at point d is $65 and the price at point e is $40 per bag. The price at point f is $64 and the price at point g is $29 per bag.
Apply the formula for the area of a triangle (Area = ½ × Base × Height) to answer the following questions.
a. What is the dollar value of the total surplus (producer surplus plus consumer surplus) when the allocatively efficient output Q1 level is being produced? How large is the dollar value of the consumer surplus at that output Q1 level?
b. What is the dollar value of the deadweight loss when output level Q2 is being produced? What is the total surplus when output level Q2 is being produced?
c. What is the dollar value of the deadweight loss when output level Q3 is produced?
d. What is the dollar value of the total surplus when output level Q3 is produced?