a)
Supply schedule for the product
a)
Explanation of Solution
A producer supplies pepper if the price is greater than or equal to the cost of the producer for the good and no producer is willing to produce more than 4 at any price. Therefore, the table would consider the following market supply schedule:
Price of pepper | Quantity of peppers | Quantity of peppers demanded by C | Quantity of peppers demanded by J |
$0.90 | 8 | 4 | 4 |
0.80 | 7 | 4 | 3 |
0.70 | 7 | 4 | 3 |
0.60 | 6 | 4 | 2 |
0.50 | 5 | 3 | 2 |
0.40 | 4 | 3 | 1 |
0.30 | 3 | 2 | 1 |
0.20 | 2 | 2 | 0 |
0.10 | 2 | 2 | 0 |
0.00 | 0 | 0 | 0 |
Introduction: Supply schedule represents the tabular information about the quantity supplied and price of a good that producers are ready to supply at different prices.
b)
Total
b)
Explanation of Solution
Quantity of peppers | C’s cost | C’ssurplus at price 0.70 | J’s cost | J’s surplus at price 0.70 |
1 | $0.10 | $0.60 (0.70-0.10) | $0.30 | $0.40 (0.70-0.30) |
2 | 0.10 | 0.60 | 0.50 | 0.20 |
3 | 0.40 | 0.30 | 0.70 | 0.00 |
4 | 0.60 | 0.10 | 0.90 | - |
Surplus: $1.60 $0.60 |
When the price is $0.70, C’s producer surplus from the first pepper is $0.60, $0.60 from the second, $0.30 from the third, $0.10 from the fourth, and after that C does not supply any pepper. Therefore, the total surplus of C is $1.60.
At $0.70, J’s producer surplus from the first pepper is $0.40, from the second $0.20, and after that J does not supply more. Therefore, the total surplus of J is $0.60.
Here, the total producer surplus at a price of $0.70 would be:
Introduction: Any excess in production, earnings, or the supply of goods is called surplus which is more than the need.
Chapter 49 Solutions
Krugman's Economics For The Ap® Course
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education