Figure 4-3

Figure 4-3 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 4-3. What area represents producer surplus at P₂?

Question

Figure 4-3
  
Figure 4-3 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 4-3. What area represents producer surplus at P₂?

Quizplus · Accepted Answer

Producer surplus is the area above the supply curve and below the price level, up to the quantity sold. At price P₂, this area is represented by B + D.

Figure 4-3 Figure 4-3 Shows the Market for Granola. the Market Is