5. Producer surplus for a group of sellers The following graph shows the supply
ID: 1103109 • Letter: 5
Question
5. Producer surplus for a group of sellers The following graph shows the supply curve for a group of sellers in the Canadian market for tablets (orange line). Each seller has only one tablet to sell. The market price of a tablet is shown by the black horizontal line at $175. Each rectangle you can place on the following graph corresponds to a particular seller in this market: blue (circle symbols) for Van, green (triangle symbols) for Amy, purple (dlamond symbols) for Carlos, tan (dash symbols) for Deborah, and orange (square symbols) for Fellx. Use the rectangles to shade the areas representing producer surplus for each person who is willing to sell a tablet at a market price of $175. (Note: If a person wiWl not sell a tablet at the market price, indicate this by leaving his or her rectangle in its original position on the palette.) Felk Deborah CarlosExplanation / Answer
Carlos reservation price(the minimum price that he is willing to receive) is only 125 whereas market price is 175,so carlos will supply the good.
Van's and Amy's reservation price are 25 and 75 respectively.Market price is 175 so both of them will supply the good.
Total supply=supply of van's+Amy's+Carlos'
Total supply=3
Number of sellers=3
Total producer's surplus=surplus of(van+amy+carlos)
van=175-25=150
Amy=175-75=100
Carlos=175-125=50
Total producer's surplus=150+100+50=300
When price increases to 275 deborah can also supply the good because her reservation price is 250 and market price is 275.
Number of sellers will increase from 3 to 4.
Surplus of Deborah=275-250=25
Total producer's surplus=300+25=325.
Producers surplus has risen.
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