Show that decreasing output below the competitive level decreases total surplus because the cost of producing this output is less than the value consumers place on it. Suppose the quantity produced is Q. 1.) Using the point drawing tool, indicate the competitive equilibrium price and quantity. Label this point 'e.' 2.) Using the triangle drawing tool, indicate the decrease in total surplus relative to the competitive equilibrium from producing Q units of output. Label this triangle 'DWL.' Carefully follow the instructions above, and only draw the required objects. p. $ per unit Q, Units per year

Show that decreasing output below the competitive level decreases total surplus because the cost of producing this output is less than the value consumers place on it. Suppose the quantity produced is Q. 1.) Using the point drawing tool, indicate the competitive equilibrium price and quantity. Label this point 'e.' 2.) Using the triangle drawing tool, indicate the decrease in total surplus relative to the competitive equilibrium from producing Q units of output. Label this triangle 'DWL.' Carefully follow the instructions above, and only draw the required objects. p. $ per unit Q, Units per year

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter4: Prices: Free, Controlled, And Relative

Section: Chapter Questions

Problem 2WNG

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