Microeconomics · free preview
Producer Surplus and Supply Shifts
Producer surplus is the area between price and the supply curve, the value sellers capture above their costs, and it moves when prices move and when costs themselves shift the curve.
1. The sellers' surplus
The sellers' surplus
2. Price moves slide along, cost moves shift
Price moves slide along, cost moves shift
3. Technology and the fate of the gain
Technology and the fate of the gain
4. Surplus as the measure of the market
Surplus as the measure of the market
5. Producer surplus from the staircase
Five sellers have costs of 12, 18, 25, 33 and 42 dollars per jar. At a market price of 30 dollars, which sellers sell and what is total producer surplus?
6. A cost shock
A new regulation raises packaging costs for every honey producer. What happens to the industry supply curve, the market price and producer surplus?
7. Surplus above variable cost
A firm sells 80 units at a price of 7 dollars each. Its total variable cost is 300 dollars and its fixed cost is 60 dollars. Compute its producer surplus in dollars and write the number.
8. Summing the sellers' gains
Five sellers have costs of 12, 18, 25, 33 and 42 dollars per jar, and the market price is 30 dollars. What is total producer surplus?
9. The regulation's bite
A new packaging regulation raises every honey producer's cost per jar. What happens in the competitive industry?
10. Surplus from revenue minus variable cost
A firm sells 60 units at a price of 8 dollars each and its total variable cost is 330 dollars. Compute its producer surplus in dollars, and write the number.
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