(Solved): 6. Producer surplus and price changes The following graph shows the supply curve for a group of stu ...
6. 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.
Region A (the purple shaded area) represents the total producer surplus when the market price is $_______, while Region B (the grey shaded area) represents ________(options are: the change in total producer surplus, the total producer surplus) when the market price___________(options are: changes from $315 to $245, is $245, is $210, changes from $210 to $245) .
In the following table, indicate which statements are true or false based on the information provided on the previous graph.
|
Statement |
True |
False |
|
|---|---|---|---|
| Producer surplus is smaller when the price is $245 than when it is $210. |
|
|
|
| Assuming each student receives a positive surplus, Van will always receive more producer surplus than Amy. |
|
|
|
In order for Deborah to earn a producer surplus of exactly $35 from selling a used tablet, the market price needs to be $______
.
Expert Answer
Region A represents the total producer surplus when the market price is $___210___, while Region B represents __the change in total producer surplus__