Figure 7-8
-Refer to Figure 7-8.If the supply curve is S',the demand curve is D,and the equilibrium price is $150,what is the producer surplus?

Question

Figure 7-8 
-Refer to Figure 7-8.If the supply curve is S',the demand curve is D,and the equilibrium price is $150,what is the producer surplus?

Quizplus · Accepted Answer

Producer surplus is the difference between the price at which producers are willing to sell a good and the actual price. In this case, the equilibrium price is $150 and the supply curve is S'. To find the producer surplus, we need to find the area below the equilibrium price and above the supply curve. This is shown in the shaded region in the diagram. The area of this triangle is 0.5 x (300-150) x (600-400) = $625. Therefore, the producer surplus is $625.

Figure 7-8 -Refer to Figure 7-8.If the Supply Curve Is S',the Demand