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Suppose the minimum price the owner of the movie theater would have accepted foradmission is $5. But she doesn’t sell admission for $5; she sells it for $7. Her producers’ orsellers’ surplus is $2. A seller prefers a large producers’ surplus to a small one. The theaterowner would have preferred to sell admission to the movie for $8 instead of $7 becausethen she would have received $3 producers’ surplus.
Surplus (ExcessSupply): A condition in which quantitysupplied is greater than quantitydemanded. Surpluses occur only atpricesaboveequilibriumprice.
In Exhibit 13,there is a shortage at a price of $5:Quantity demanded (150 units) is greater thanquantitysupplied (50 units). Buyers will not be able to buy all they had hoped to buy at $5.Some buyers will bid up the price to get sellers to sell to them instead of to other buyers.Some sellers, seeing buyers clamor for the goods, will realize that they can raise the price
This means the maximum buying price is greater than the minimum selling price for allunits less than 150. In particular, the maximum buying price is greater than the minimumselling price for units 101 to 149. For example, buyers might be willing to pay $17 forthe 110th unit, and sellers might be willing to sell the 110th unit for $10. But no unitafter the 100th unit (not the 110th unit, not the 114th unit, not the 130th unit) will beproduced and sold because of the price ceiling. In short, the price ceiling prevents mutuallyadvantageous trades from being realized.
Exhibit 20:The price floor is $20 and the equilibriumprice is $15. At $15, quantitydemanded = quantitysupplied. At $20, quantitysupplied > quantitydemanded.
1) In a market whereQdx= 50-0.5P andQsx=20+P, governmentmandates TL 15 as a priceceiling. Findtheexcesssupply.