Intermediate Microeconomics · free preview
Producer Surplus and Quasi-Rent
Producer surplus is revenue over variable cost, the area between price and the supply curve, 32 at the worked price of 16, and the portion covering fixed cost is the quasi-rent, the return to the fixed factor that entry and exit arbitrage over the long run.
1. The firm's surplus area
The firm's surplus area
2. Decomposing the surplus
Decomposing the surplus
3. Surplus and supply together
Surplus and supply together
4. The module's midpoint
The module's midpoint
5. The surplus computation
At price 16 with supply 4, what is the firm's producer surplus?
6. The marginal unit's contribution
Why does the last unit supplied contribute zero surplus?
7. Quasi-rent meaning
What is the quasi-rent of the fixed factor here?
8. The envelope twin
How does producer surplus grow as price rises along the supply curve?
9. Profit from surplus
Subtract the fixed cost 36 from producer surplus 32, and write the profit.
10. Revenue at the tangency
Compute revenue at price 16 and quantity 4, and write the number.
11. The variable bill at four
At price 16 the firm supplies 4 units earning producer surplus 32 on revenue 64. What was its variable cost?
12. Surplus decomposed
Producer surplus is 32, profit is minus 4. What is the relation?
13. Surplus growth along the curve
Producer surplus is 8 at price 10 and 32 at price 16. What does the growth pattern show?
14. The fixed factor idled
If the price fell all the way to 7, what happens to the quasi-rent?
15. Supply at twelve
Using q equals 2 plus root of p minus 4 over 3, compute supply at p of 12, and write the number to two decimals.
16. Variable cost at three
For the cubic family, compute total variable cost at q of 3, and write the number.
Practice this interactively
Free account · instant grading · spaced review that schedules itself.
Start this course for free