The following figure illustrates the demand and supply of decorative light bulbs in a perfectly competitive market.

-Refer to the figure above.What is the producer surplus in the market?

Question

The following figure illustrates the demand and supply of decorative light bulbs in a perfectly competitive market.
 
-Refer to the figure above.What is the producer surplus in the market?

Quizplus · Accepted Answer

Producer surplus is the area above the supply curve and below the equilibrium price. In the given scenario, this area forms a triangle with a base of 10 units (from 0 to 10 on the quantity axis) and a height of $15 (from the equilibrium price of $15 down to the price axis). The area of a triangle is 1/2 * base * height, so the producer surplus is 1/2 * 10 * 15 = $75.

The Following Figure Illustrates the Demand and Supply of Decorative