Asked by EZEKIEL LABRADOR on Jun 22, 2024
Verified
Refer to Figure 9.4.2 above. Before this policy was implemented, producer surplus was:
A) $10.
B) $2000.
C) $4000.
D) $6000.
E) $12000.
Producer Surplus
The difference between what producers are willing to sell a good for and the higher price they actually receive.
Government Policy
Actions, regulations, or laws enacted by a government to influence economic, social, or environmental outcomes within its jurisdiction.
Producer Surplus
Producer surplus is the difference between the amount a producer is willing to accept for a good versus the actual market price they receive.
- Understand the notions of producer and consumer surplus, and calculate the changes in these surpluses as a result of market interventions.
Verified Answer
SB
Sarrah BishopJun 25, 2024
Final Answer :
B
Explanation :
Producer surplus is the area above the supply curve but below the price level, up to the quantity sold. Before the policy, assuming a competitive market equilibrium, the producer surplus would be represented by a triangle with a base (quantity) and height (price) that, when calculated, equals $2000.
Learning Objectives
- Understand the notions of producer and consumer surplus, and calculate the changes in these surpluses as a result of market interventions.