Let P represent price; let Q^Srepresent quantity supplied; and assume the equation of the supply curve is $$P = 15 + ( 1 / 3 ) Q ^ { S }$$ . If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

Question

Quizplus · Accepted Answer

To find the producer surplus, we need to find the area above the supply curve and below the market price. We know that the quantity supplied at a price of $15 is:

QS1 = (90 - 15) / (1/3) = 225

So, the supply curve intersects the horizontal axis at a quantity of 225. We can use this to find the equilibrium price:

90 = 15 + (1/3)Q

Q = 225

P = 15 + (1/3)*(225) = $90

So, producer surplus is:

PS = (1/2)*(90 - 15)*(90 - 15 - 225)/(1/3) = $1,350

Therefore, the statement is true: if 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

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

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