-The Table Above Gives the Demand and Supply Schedules for Bread

question 315

Essay

-The table above gives the demand and supply schedules for bread. Assume that the only people who benefit from bread are the people who consume it and the only people who bear the cost of bread are the people who produce it.
a) What is the maximum price that consumers are willing to pay for the 80th loaf of bread?
b) What is the minimum price that producers are willing to accept to produce 200 loaves of bread?
c) What is the efficient quantity of bread?
d) If the market is efficient, what is the consumer surplus?
e) If the market is efficient, what is the producer surplus?
f) If one firm owns all the bread outlets and sells 120 loaves per day, what is the deadweight loss (if any)?

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Definitions:

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment, calculating the difference between the present value of cash inflows and outflows.

Company Stock

Shares of ownership in a corporation, representing a claim on the company's earnings and assets.

Incremental Value

The additional value generated by taking a specific action, such as implementing a project, over the base case without taking the action.

Equity-Financed

Describes projects or purchases funded through the issuance of equity or shares, rather than debt.