-Consider Figure 5.1.Suppose the Mexican government provides a subsidy of $200 per ton to its steel producers,as indicated by the supply schedule SM ?w?th s?bs?d??.
As a result of the subsidy Mexican steel producers gain ____ of producer surplus.

Question

Quizplus · Accepted Answer

The producer surplus gain is calculated by the area of the triangle formed by the subsidy, which is $200 per ton, and the increase in quantity supplied. If the increase in quantity supplied is 3 tons, the gain in producer surplus is 0.5 * $200 * 3 = $300. However, if the increase is 6 tons, the gain is 0.5 * $200 * 6 = $600.