AP Microeconomics 2.6: Market Equilibrium and Surplus

Find equilibrium price and quantity from supply and demand, then calculate consumer, producer, and total economic surplus from graphs or tables.

[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

\hline A & Draw a correctly labeled graph of the market for wooden desks with a downward- sloping demand (D) curve and an upward-sloping supply $\left(\mathrm{S}_{1}\right)$ curve and label the market equilibrium price as $\mathrm{P}_{\mathrm{M}}$ and the market equilibrium quantity as $\mathrm{Q}_{\mathrm{M}}$ . & 1 point \\ \hline Point 2 & Draw a correctly labeled graph for Deskward that shows the firm's horizontal demand and marginal revenue $(\mathrm{d}=\mathrm{MR})$ curve extended from the market equilibrium price $\left(\mathrm{P}_{\mathrm{M}}\right)$ and label the firm's price as $\mathrm{P}_{\mathrm{F}}$ . Figure for Answer to Question MKT-4.A—a. Define (using graphs as appropriate) market equilibrium, consumer surplus, and producer surplus. b. Explain (using graphs as… question 1 — AP Microeconomics & 1 point \\ \hline

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