Name: Nguyễn Thi Thanh Hương Number roll: CA140387 Class: EL1401 INDIVIDUAL ASSIGNMENT In a supply-and-demand diagram, show producer and consumer surplus at the market equilibrium Price Consumer Surplus Producer Surplus Supply Equilibrium Price Quantity Equilibrium Quantity This chart shows the consumer and producer surpluses as the market reaches an Demand equilibrium of supply and demand - - When the demand curve and supply curve intersect at a point, then supply and demand reach equilibrium From the intersection point to the vertical axis, we have equilibrium price, which is the price of the product when supply and demand reach equilibrium From the intersection point down to the horizontal axis, we have equilibrium quantity, which is the quantity of products when supply and demand reach equilibrium The area below the price and above the supply curve is called the producer surplus The area above price below demand curve is called consumer surplus Therefore, the total area between the supply and demand curves is when the sum of the surpluses of the consumer and producer reaches the equilibrium point Consider two ways to protect your car from theft The Club (the Steering wheel lock) makes it difficult for a car thief to take your car Lojack (a tracking system) makes it easier for the police to catch the thief who has stolen it Which of these methods conveys a negative externality on other car owners? Which conveys a positive externality? Do you think there are any policy implications of your analysis? - - - The club makes it difficult for a thief to take your car and so when he can't steal your car, he can go to another car to steal If he still steals your car, the club (a steering wheel lock) will cause the thief to have an accident with other car drivers on the road Therefore, this is a negative externality effect for a clubless car (steering lock) Meanwhile, LoJack makes it easier for the police to track your vehicle If the car thief encounters two cars without a Club, but the car thief is afraid that one of the cars may have a Lojack system installed, the vehicle with the Lojack system will impose a positive exterior on the other vehicle Therefore, this is a positive externality In my opinion there is a policy implication from this result Because it's hard to force all car users to install trackers on their vehicles However, using LoJack to protect their vehicle will produce a more positive response When most people use LoJack, it is easy for the police to catch car thieves and from there society will be more secure Many years ago, Peggy paid $500 to put together a re-cord collection Today, she sold her albums at a garage sale for $100 How does this sale affect current GDP? - Conceptually, only currently manufactured goods affect GDP The fact that Peggy sold her collection and this one was used in the past that is unrelated to current production and therefore does not affect GDP