The following figure shows the demand and supply for a commodity in the domestic U.S.market as well as the global market.The commodity is imported from the rest of the world to the U.S.market.
Figure 10-3
-Refer to Figure 10-3.The total producer surplus prior to trade was _____.

Question

The following figure shows the demand and supply for a commodity in the domestic U.S.market as well as the global market.The commodity is imported from the rest of the world to the U.S.market.
Figure 10-3

-Refer to Figure 10-3.The total producer surplus prior to trade was _____.

Quizplus · Accepted Answer

Producer surplus is the difference between the price a producer receives for a good and the marginal cost of producing that good. Prior to trade, the price of the good is P0, and the marginal cost of production is P3. Therefore, the total producer surplus prior to trade is P3EP0.

The Following Figure Shows the Demand and Supply for a Commodity