Use the Graph to Answer the Following Questions About Music $$\text { R22 }$$

question 54

Essay

Use the graph to answer the following questions about music album downloads.
$$\text { R22 }$$
a. What is the equilibrium price of music album downloads before trade?
b. What is the equilibrium quantity of music album downloads before trade?
c. What is the price of music album downloads after trade is allowed?
d. What is the quantity of music album downloads exported after trade is allowed?
e. What is the amount of consumer surplus before trade?
f. What is the amount of consumer surplus after trade?
g. What is the amount of producer surplus before trade?
h. What is the amount of producer surplus after trade?
i. What is the amount of total surplus before trade?
j. What is the amount of total surplus after trade?
k. What is the change in total surplus because of trade?

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Definitions:

Straight-Line Method

A method of calculating depreciation or amortization by evenly dividing the asset’s cost over its useful life.

Salvage Value

The estimated residual value of an asset at the end of its useful life, expected to be recovered after its use is completed.

Monthly Depreciation

The portion of an asset’s cost that is expensed each month over its useful life.

Old Plant Asset

An asset that has been in use for a considerable period and is often nearing the end of its useful life.