Figure 7-11

-Refer to Figure 7-11.At the equilibrium price,producer surplus is
A) $200.
B) $400.
C) $450.
D) $900.

Question

Figure 7-11
 
-Refer to Figure 7-11.At the equilibrium price,producer surplus is
A) $200. 
B) $400. 
C) $450. 
D) $900.

Quizplus · Accepted Answer

Producer surplus is the area above the supply curve and below the equilibrium price. In this case, the equilibrium price is $100, and the supply curve is a straight line with a slope of 2. The area above the supply curve and below the equilibrium price is a triangle with a base of 20 and a height of 50, so the area is (1/2) * 20 * 50 = $500. However, we need to subtract the producer surplus at the initial price of $50, which is (1/2) * 20 * 50 = $500. Therefore, the producer surplus at the equilibrium price is $500 - $500 = $0.

Figure 7-11 -Refer to Figure 7-11.At the Equilibrium Price,producer Surplus Is