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pirex pirex
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6 years ago
Suppose the market supply curve for wheat is shown in the above figure. Calculate the producer surplus when price is $2 per bushel. If legislation mandates that the price be $1 per bushel, what is the resulting loss in producer surplus?
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Microeconomics

Microeconomics


Edition: 6th
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#1
6 years ago
At a price of $2, producer surplus equals ($1.50 * 1500)/2 = $1125. At a price of $1, producer surplus equals ($0.50 * 500)/2 = $125. The $1 decrease in prices results in a $1000 decrease in producer surplus.
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