A. SEE DRAWINGThus, falling manufacturing prices decreases the equilibrium price of $mathrmTV^prime$ s and for this reason, rises the equilibrium quantity.B. SEE DIAGRAM C. SEE DIAGRAM




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Video Transcript

below we can see an instance of the supply present being shifted to write to the best which is illustrative of the expenses of manufacturing going down. So we moved from suggest A to allude B to point C as our respective equilibrium Tze And during that time, what's happening to the price? Well, the price you deserve to watch is falling and the quantity you can watch is boosting. Okay, so now what about the customer surplus in the producer surplus? Well, at initially, the consumer surplus is to the left of the demand curve to the right of the vertical axis. And it's every little thing over the price line at point A. As we relocate down, you can view that this consumer excess continues to flourish and it is now everything over line the line from allude B and then lastly whatever from the line at point C. Okay, so what around the producer surplus? Well, the producer surplus initially is additionally established by a Let's eliminate the customer surpluses for a 2nd. So your producer surplus would certainly be whatever listed below line A to the right of the vertical axis and to the left of the initial supply curve. Then what happens? Then it grows. It grows to be everything listed below line B and also aacquire to the appropriate of the vertical axis right into the left of the second supply Kurt. And then ultimately, it's whatever listed below line, watch and also aget to the left of the third supply curve right into the right of the vertical axis. So we understand for sure that the customer surplus is proceeding to grow over time. We're not certain if the producer surplprovides flourishing or shrinking. We're remaining the same. That's going to depend on the elasticity of supply and demand. So here's a case where the supply is incredibly elastic and also what happens right here. Well, our initial producer excess is right here, and also our initial consumer excess is below. So aobtain, for consumer surplus to the left of the demand also curve to the best of the vertical axis and above the line, developed from the price of equilibrium that producer surplsupplies to the right of the vertical axis to the left of the supply curve and listed below the line created by the price at equilibrium. Then what happens well as we move from the greater price to the lower price, the customer excess is going to grow to this whole region. So it's every little thing above the brand-new price level. All best, The Thea producer surplus, on the other hand, is down here, every little thing listed below the price level. So aacquire, it's not totally certain if the producer excess has actually grvery own all that much. But what we have the right to tell is that develop Excusage me. Consumers have clearly benefited the the majority of from this adjust.