Supply and demand curves for an item of medical equipment are shown in the graph below.  In order to compete with a new product by a rival company, the price is temporarily lowered to $20,000. What is the reduction (from equilibrium) in producer surplus that results from this artificially low price?

Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
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Chapter11: Resource Markets
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Supply and demand curves for an item of medical equipment are shown in the graph below.  In order to compete with a new product by a rival company, the price is temporarily lowered to $20,000.

What is the reduction (from equilibrium) in producer surplus that results from this artificially low price?

$p (price) in thousands
44
Supply
40
36
32
28
24
20
16
Demand
12
8.
4
16
18
20
q (quantity)
2
4
6
8.
10
12
14
-4 1
Transcribed Image Text:$p (price) in thousands 44 Supply 40 36 32 28 24 20 16 Demand 12 8. 4 16 18 20 q (quantity) 2 4 6 8. 10 12 14 -4 1
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