# PriceSupply24A2220H18F1614I12Demand108++5 6 710 11 uatity348900

Question
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1. Calculate the loss in producer surplus of the price fall to \$12, due to

1. Some producers leave the market.

2. The remaining producers sell their product at the lower price

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Step 1

The producer surplus is the difference between the actual market price of a good and the lowest price a producer would be willing to accept for a good. Graphically producer surplus is the area that lies  below the price line and above the supply curve.

Step 2

Given, the equilibrium price is \$16. At equilibrium price P = \$16,  area of triangle DFB in the given graph (in question) represent the producer surplus (PS). Which is equal to:

Step 3

If price fall to \$12, then quantity also falls to 4 unit.

In the graph, area of tria...

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