Figure 4-6
Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P₁ and a quantity of Q₁. Now suppose producers decide to cut output to Q₂ in order to raise the price to P₂.
-Refer to Figure 4-6.What area represents producer surplus at the equilibrium price of P₁?

Question

Figure 4-6
  Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P₁ and a quantity of Q₁. Now suppose producers decide to cut output to Q₂ in order to raise the price to P₂.
-Refer to Figure 4-6.What area represents producer surplus at the equilibrium price of P₁?

Quizplus · Accepted Answer

Producer surplus is the area above the supply curve and below the equilibrium price. At price P₁, this area is represented by D + E.

Figure 4-6 Figure 4-6 Shows the Market for Granola. the Granola