Figure 7-17
-Refer to Figure 7-17.At equilibrium,producer surplus is

Question

Figure 7-17 
-Refer to Figure 7-17.At equilibrium,producer surplus is

Quizplus · Accepted Answer

At equilibrium, producer surplus is equal to the area above the supply curve and below the market price. The supply curve in this graph is the linear equation P = 6 + Q/4, so at a quantity of 36 (where the supply and demand curves intersect), the equilibrium price is $15. Therefore, the area of producer surplus is (15 - 6) x 36 / 2 = $162 / 2 = $81. However, since the cost curve intersects the supply curve at a quantity of 9, the producer surplus below this point is actually negative (since the cost of production is higher than the market price). Therefore, the total producer surplus at equilibrium is $81 - (6 x 9 / 2) = $72.

Figure 7-17 -Refer to Figure 7-17.At Equilibrium,producer Surplus Is