PowerPoint PresentationSlide 2Slide 3Slide 4Slide 5Slide 6PQ$5.00$10.00$15.001,0002,0003,000Consumer Surplus: Difference between maximum amount we are willing to pay and the price we pay.Suppose consumers may purchase as much or as little of this good as they want to at a market price: PMarket = $6.00Consumer Surplus in this market equals ________ dollars.Demand (MB)PQ$5.00$10.00$15.001,0002,0003,000Producer Surplus: Difference between the minimum amount a producer will accept for his/her good and the price he/she receives.Supply (MC)Suppose producers may sell as much or as little as they want to at a market price of: PMarket = $10.00Producer Surplus in this market equals __________ dollars.PQ$5.00$10.00$15.005,00010,00015,000SupplyDemandPerfect Competition (Price taking firms and consumers) maximizes the sum of Producer and Consumer Surplus:In this market, consumer surplus: CS = ____________Producer Surplus is: PS = ____________Monthly RentApartments$500$1000$15001,0002,0003,000SupplyDemandRent Control: Suppose a strictly enforced Rent Ceiling of $700/ Month is placed on this market:The change in producer surplus brought about by this policy is: ΔPS = ____________The change in consumer surplus brought about by this policy is: ΔCS = ____________The Net Gain to the community from this change is ___________.$1100PQ$5.00$10.00$15.005,00010,00015,000Marginal CostDemandPrice Floors and Supports:The change in consumer surplus brought about by this policy is: ΔCS = ____________The change in producer surplus brought about by this policy is: ΔPS = ____________The deadweight loss caused by the policy is _______.If this is a price support, how much must taxpayers pay to support this price? Suppose a price floor of $12 is placed on this market.Price (per gallon)Gasoline (Millions of Gallons)$2.50$5.00$7.501,0002,0003,000SupplyDemandPolicy: Impose a $1.50 per gallon gasoline taxWith the imposition of this tax, the change in consumer surplus is: ΔCS = ____________The change in producer surplus brought about by this change is: ΔPS = ____________The change in government tax revenue is: ΔTR = _____________The Net Gain to Society from imposing this gas tax is ____________.