If demand is given by qd = 20 – P and supply is given by qs = P, then producer surplus is: a. 50 b. 100 c. 30 d. 20
Question
Solution
First, we need to find the equilibrium price and quantity. This is where quantity demanded (qd) equals quantity supplied (qs).
Setting qd = qs, we get:
20 - P = P
Solving for P, we get:
P = 20/2 = 10
Substituting P = 10 into the supply equation, we get:
qs = 10
Now, we can calculate the producer surplus. Producer surplus is the area above the supply curve and below the price, up to the quantity sold. In this case, it's a triangle with a base of 10 (the quantity) and a height of 10 (the price minus the minimum price, which is 0 in this case).
The area of a triangle is 0.5 * base * height, so the producer surplus is:
0.5 * 10 * 10 = 50
So, the correct answer is:
a. 50
Similar Questions
Suppose the market supply curve is p = 5Q. At a price of 10, producer surplus equalsGroup of answer choices50.25.12.50.10.
Refer to Figure 7-15. When the price rises from P1 to P2, what area represents the increase in producer surplus?Group of answer choicesAA+BA+B+CG
Calculate producer surplus. Do not include $ in your solution. If your answer is a decimal, round to 2 decimal places (1.225 should be written as 1.23)
Figure 7-3Refer to Figure 7-3. If the price of the good is $14, then producer surplus isGroup of answer choices$19.50.$25.00.$20.50.$22.50.
uppose demand for a good is QD = 100 - P and supply is QS = -20 + P. What is the equilibrium quantity?Group of answer choices20406080
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.