Principles of Microeconomics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165905
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 7, Problem 3CQQ
To determine
The impact of the increased price on producer surplus .
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The graph shows the supply curve of smart watches and the market price of a smart watch.
Draw the producer surplus from smart watches. Label it.
What is producer surplus?
Producer surplus is
OA. equal to the value that the seller places on the good, summed over the quantity
sold
OB. received by a producer when price exceeds the marginal cost of production
OC. the value of the good minus its marginal cost, summed over the quantity sold
D. the marginal benefit received by a producer, summed over all the units sold
500+
400-
300-
200-
100+
0-
Price (dollars per smart watch)
S-MG
0
Market
price
1
4
5
6
2
3
Quantity (millions of smart watches per year)
>>> Draw only the objects specified in the question.
Q
7
For each scenario, decide whether it results in a producer or consumer surplus. Then calculate the resulting surplus.
Alice is willing to spend $30$30 on a pair of jeans and has a coupon for $10$10 off. She purchases a pair of jeans that costs $35$35 pre-discount.
Alice receives a
Alice's surplus: $
Jeff finds steak in the supermarket priced at$16$16 but that he would have been willing to pay $20$20 for. The butcher notices the meat is near the expiration date and gives him an extra 7575% off.
Jeff receives a
producer surplus.
consumer surplus.
Jeff's surplus: $
Nicole has a hockey puck from the 2018 Winter Olympic Games and puts it up for sale on eBay. She will only sell the puck if the winning bid is greater than or equal to $500$500. After the bidding closes, the last bid stands at $501$501.
Nicole receives a
Nicole's surplus: $
A. The demand curve for a product is D = -2p + 800 , where the demand is units , and p is the price in $ . When the price is $ 100 , calculate the consumer surplus . Also , show a graph that indicates the consumer surplus .
B. The supply curve for a product is S = 5p - 400 , where the supply is 5 units , and p is the price in $ . When the price is $ 200 , calculate the producer surplus . Also , show a graph that indicates the producer surplus
Chapter 7 Solutions
Principles of Microeconomics, 7th Edition (MindTap Course List)
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Similar questions
- Which area represents the producer surplus?arrow_forwardThe local weather treatment facility, a price taker, is able to supply the first gallon of water for $0.01. The second for $0.02. The third for $0.03 and so on. The current price of water is $0.06 per gallon. - choose each of the following that are correct a. Producer surplus will rise if the market price increases to $0.07 per gallon b. This water treatment facility will choose to produce seven gallons of water c. The firm will enjoy higher producer surplus if it unilaterally raises prices d. This water treatment facility will earn $0.15 in producer surplusarrow_forwardWhen does a producer surplus occur? a. when individuals pay less than the maximum amount they would have been willing to pay for a good or service b. when producers sell a product for the exact minimum amount they would be willing to accept c. when producers sell a product for less than the minimum amount they would be willing to accept d. when producers sell a product for more than the minimum amount they would be willing to acceptarrow_forward
- Suppose that last year the equilibrium price and the quantity of good X were $10 and 5 million pounds. Because of strong demand this year, the equilibrium price and the quantity of good X are $12 and 7 million pounds, respectively. Assuming that the supply curve of good X is linear, what happened to producer surplus in the market? A B Producer surplus increased from $12.5 million to $49 million. Producer surplus increased from $12.5 million to $24.5 million. Producer surplus increased from $3 million to $7 million. Producer surplus increased from $4.2 million to $5.6 million. C Darrow_forwardCalculate the producer surplus when the market price is $34 and the willingness to sell the product is $27arrow_forwardCalculate the Producer Surplus.arrow_forward
- Calculate the change in producer surplus when the market price increases from $14 to $16 and the quantity supplied increases from 5,000 units to 6,000 units per month. Assume that the supply curve is linear. Producer surplus will nearest penny.) by $ (Round your answer to thearrow_forwardGavin has been working full-time as a gardener for$300 a week. When the market price of gardenersrises to $400, Hector becomes a gardener as well.How much does producer surplus rise as a result ofthis price increase?a. by less than $100b. between $100 and $200c. between $200 and $300d. by more than $300arrow_forwardDemand A. $100 thousand B. $200 thousand OC. $600 thousand D. $800 thousand Supply 1 P= 50+ P=80-QD QD=80-P QS=2P-100 The equations above describe the demand and supply for Chef Emnie's Sushi-on-a-Stick. The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units. What is the value of producer surplus?arrow_forward
- Suppose the demand for French bread rises. Explain what happens to producer surplus in the market for French bread. Explain what happens to producer surplus in the market for flour. Illustrate your answers with diagrams.arrow_forwardThe table shows the demand and supply schedules for on-campus housing. If the college puts a rent ceiling on rooms of $750 a month, rent is $ and the number of rooms rented is. The on-campus housing market is Rent (dollars per month) 500 550 600 650 700 750 Quantity demande 2.500 2,250 2,000 1,750 1,500 1,250 (rooms) Quantity supplied 2,000 2,000 2,000 2,000 2,000 2,000arrow_forwardThe demand for pizza is represented by P^D=10-(Q^D/4), and the supply of pizza is represented by P^S=4+(Q^S/2), with Q in thousands and P in dollars. The market for pizza is perfectly competitive. Suppose a price ceiling was set $2 below the equilibrium price. What would be the result? A. There would be a surplus of 12000. B. Quantity demanded would equal 4000. C. This is a nonbinding price ceiling. D. There would be a shortage of 12000.arrow_forward
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