AP Microeconomics 2.6 Market Equilibrium and Consumer and Producer Surplus Questions

Practise locating competitive equilibrium and using supply-demand graphs or schedules to interpret buyer and seller gains and calculate total market surplus.

Exam points

find or draw equilibrium price and quantity at the intersection of market demand and supply
identify, shade or calculate consumer and producer surplus from curves or discrete schedules
calculate total economic surplus as CS plus PS or as the area between demand and supply
explain why undistorted competitive equilibrium maximises total surplus and is allocatively efficient

Covered syllabus points

MKT-4.A—a. Define (using graphs as appropriate) market equilibrium, consumer surplus, and producer surplus. b. Explain (using graphs as…

[Maximum number: 1]

Deskward is a typical profit-maximizing firm that produces and sells wooden desks in a constant-cost, perfectly competitive market that is in long-run equilibrium.

Draw correctly labeled side-by-side graphs for the wooden desk market and for Deskward and show each of the following.

The market equilibrium price and quantity, labeled $\mathrm{P}_{\mathrm{M}}$ and $\mathrm{Q}_{\mathrm{M}}$ , respectively

Draw a correctly labeled graph of the market for wooden desks with a downward-sloping demand (D) curve and an upward-sloping supply $\mathrm{S}_{1}$ curve and label the market equilibrium price as $\mathrm{P}_{\mathrm{M}}$ and the market equilibrium quantity as $\mathrm{Q}_{\mathrm{M}}$ . Figure for Answer to Question 1 — AP Microeconomics

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