Table 4-7

-Refer to Table 4-7.The equations above describe the demand and supply for Pauline's Pickled Pomegranates.The equilibrium price and quantity for Pauline's Pickled Pomegranates are $30 and 15 thousand units.What is the value of producer surplus?

Question

Table 4-7
 
-Refer to Table 4-7.The equations above describe the demand and supply for Pauline's Pickled Pomegranates.The equilibrium price and quantity for Pauline's Pickled Pomegranates are $30 and 15 thousand units.What is the value of producer surplus?

Quizplus · Accepted Answer

Producer surplus is the difference between total revenue and variable costs, which in this case is the area above the supply curve and below the equilibrium price. Using the given equations, we can find the supply curve: 
Qs = -15 + 3P 
At P = $30: 
Qs = -15 + 3(30) 
Qs = 75 
So, the producer surplus is the area of the triangle: 
(1/2) x ($30-$15) x (75-15) = $112.5 thousand

Table 4-7 -Refer to Table 4-7.The Equations Above Describe the Demand and Describe