Figure 5.3 Figure 5.3 shows the market for tiger shrimp.The market is initially in equilibrium at a price of $15 and a quantity of 80.Now suppose producers decide to cut output to 40 in order to raise the price to $18.
-Refer to Figure 5.3.The value of producer surplus at the equilibrium price of $15 is

Question

Figure 5.3  Figure 5.3 shows the market for tiger shrimp.The market is initially in equilibrium at a price of $15 and a quantity of 80.Now suppose producers decide to cut output to 40 in order to raise the price to $18.
-Refer to Figure 5.3.The value of producer surplus at the equilibrium price of $15 is

Quizplus · Accepted Answer

At the equilibrium price of $15, the quantity produced and consumed is 80. The producer surplus at this equilibrium can be calculated by finding the area above the supply curve and below the equilibrium price. We can calculate this area as a triangle with base equal to 80 (quantity) and height equal to (18-15) = 3 (price difference between equilibrium and intended price)

Thus, producer surplus = (1/2) x base x height = (1/2) x 80 x 3 = $ 120

Therefore, the correct option is B, $160, as it is the closest answer choice to the calculated producer surplus.

Figure 53 Figure 5