A small town is served by many competing supermarkets, which all have the same constant marginal cost. Use the black point (plus
symbol) to show the competitive price and quantity in this market. Then use the green area (triangle symbol) to shade the area representing consumer surplus in the market for groceries, and use the purple area (diamond symbol) to shade the area representing producer surplus.
1 answer:
Answer and Explanation:
From the diagram in the picture (please find attached) we see that the competitive price and quantity lies at the marginal cost( which the producer cannot go below). The consumer surplus lies just below the demand curve(the downward sloping curve with) and the producer surplus is above the marginal cost. Note the producer surplus is the difference between what the supplier is willing to sell and how much he actually sells, the marginal cost is the lowest the supplier would want to sell. This applies to the consumer surplus too
The producer surplus region was indicated with vertical strokes in the diagram attached
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Answer:
Cash 2,214,007 debit
bonds payable 2,000,000 credit
premium on B.P 214,007 credit
Explanation:
To know the proceeds for the bonds we will calculate the present value of the coupon payment and the present vlaue of the maturity at market rate:
The coupon payment will be an ordnary annuity
Coupon payment: 2,000,000 x 0.05 = 100,000
time: 10 years x 2 payment per year = 20
rate 8.5% annual rate: 0.085/2 = 0.0425 semiannual rate
PV $1,329,436.5808
Whilethe maturity the present value of a lump sum
Maturity 2,000,000.00
time 10 years to maturity
rate 0.085
PV 884,570.83
PV coupon payment $1,329,436.5808
PV maturity $884,570.8301
Total $2,214,007.4109
facevalue 2,000,000
premium 214,007