Region A (the purple shaded area) represents the total producer surplus when the

Question

Region A (the purple shaded area) represents the total producer surplus when the market price is $____ , while Region B (the grey shaded area) represents (Total producer surplus, the change in total producer surplus) when the market price (Changes from $210 to $245, Changes from $315 to $245, is $210, is $245).

3. Producer surplus and price changes The following graph shows the supply curve for a group of students looking to sell used tablets. Each student has only one used tablet to sell. Each rectangular segment under the supply curve represents the "cost," or minimum acceptable price, for one student. Assume that anyone who has a cost just equal to the market price is willing to sell his or her used tablet. 2 0 420 350 Beth 280 Andrew Teresa Sam 140 Neha 70 Lorenzo 5 QUANTITY (Used tablets)

Explanation / Answer

Producer surplus is the area below market price and above supply curve.

a) $ 210

b) Change in total producer surplus

c) Changes from $210 to $245

d) True because at price of $ 245, producer surplus = Purple area + Grey area

True because Sam is willing to sell at lower price but get the same price at which all other producers sell their product.

e) $ 245

At price of $ 245, Surplus of Tesela = (245 - 210) x (4 - 3) = $ 35

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