In-Class Week 4: Producer Surplus
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In-Class Week 4: Producer Surplus Figure 7-8
Price 300
275
250 S' S 225
200
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75
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25 D D'
25 50 75 100 125 150 175 200 Quantity
____ 1. Refer to Figure 7-8. If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus? a. $625 b. $1,250 c. $2,500 d. $5,000 ____ 2. Refer to Figure 7-8. If the demand curve is D and the supply curve shifts from S’ to S, what is the change in producer surplus? a. Producer surplus increases by $625. b. Producer surplus increases by $1,875. c. Producer surplus decreases by $625. 3. Refer to Figure 7-9. If the equilibrium price rises from $50 to $200, what is the additional producer surplus to initial producers? a. $625 b. $3,750 c. $5,625 d. $10,000
1 Figure 7-10
Price 170
160
150 S
140
130
120
110
100
90
80
70
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50
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30
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10 D
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Quantity
____ 4. Refer to Figure 7-10. If the government imposes a price ceiling of $70 in this market, then the new producer surplus will be a. $50. b. $100. c. $175. d. $350. ____ 5. Refer to Figure 7-10. If the government imposes a price ceiling of $70 in this market, then producer surplus will decrease by a. $50. b. $125. c. $150. d. $200.
2 Figure 7-11
Price
Supply
P2 B A
P1 C G
D
Q1 Q2 Quantity
____ 15. Refer to Figure 7-11. When the price is P2, producer surplus is a. A. b. A+C. c. A+B+C. d. D+G.
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