Let P represent price; let Q^Srepresent quantity supplied; and assume the equation of the supply curve is $$P = 10 + ( 1 / 4 ) Q ^ { S }$$ . If 80 units of the good are produced and sold, then producer surplus amounts to $1,200.

Question

Quizplus · Accepted Answer

Producer surplus is calculated as the area above the supply curve and below the price level. With 80 units, the price is $30, and the producer surplus is the area of the triangle with base 80 and height 20, which is $800, not $1,200.

Let P Represent Price; Let QS represent Quantity Supplied; and Assume

Let P Represent Price; Let Q^Srepresent Quantity Supplied; and Assume