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Welcome to the Q&A for ECN/APEC 2010, where you can ask questions and receive answers from your fellow students, the TA, and your professor.

Please only ask questions about the material for the course. Try to create discussions about the material we see in class, instead of just thinking of economics in general (this is an introduction to microeconomics class, not a policy or government class).

For questions and discussions about course organization or other course related topics, come see us after class or during office hours.

Feel free to discuss quiz questions on the Q&A, but do not provide direct answers to quiz questions before the quiz's due date.

Question 7 on Midterm 1

–1 vote
17 views

Consider the following supply curve, that represents the supply of a number of producers who are willing to produce either 1 or 0 units of the good.

image

If the price is $16, what is the producer surplus for these producers?

Why is the answer $16 and not $14?

asked Apr 28 by canvas-e25408d8f8d15 (216 points)

1 Answer

0 votes
You just need to calculate the change in the producers that are actually receiving a surplus. Producer 1 is willing to provide the good at 8 but is getting to sell it at 16 therefore his surplus is 8 or 16-8=8 you can calculate what the other 2 producers are getting respectively as well:

16-10=6

16-14=2

You then just add those surpluses up since there are only those three that have a surplus cause the rest of the producers are sustaining losses at the price of $16:

8+6+2=16
answered May 1 by canvas-946e15a61c43e (150 points)
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