6. Producer surplus and price changes The following graph plots a supply curve (orange line) for a group of recent graduates looking to sell used finance textbooks. Each seller has only a single used textbook available for sale. Think of each rectangular area beneath the supply curve as the "cost," or minimum price that each seller is willing to accept. Assume that anyone who has a cost that equals the market price is willing to sell their used textbook. PRICE (Dollars per used textbook) 120 100 80 H+ 60 60 Y Latasha 40 X Jake ㅁ Frances 20 20 Dmitri 0 0 + Nick Rosa 1 2 3 4 5 6 QUANTITY (Used textbooks) ? Region X (the purple shaded area) represents total producer surplus when the market price is equal to $ area) represents when the market price while Region Y (the grey shaded In the following table, indicate which statements are true or false based on the information provided on the previous graph. Statement True False Assuming each seller receives a positive surplus, Dmitri will always receive more producer surplus than Frances. Producer surplus is smaller when the price is $70 than when it is $50. O O 0 O In order for Nick to earn a producer surplus of exactly $30 from selling a used textbook, the market price must be $
6. Producer surplus and price changes The following graph plots a supply curve (orange line) for a group of recent graduates looking to sell used finance textbooks. Each seller has only a single used textbook available for sale. Think of each rectangular area beneath the supply curve as the "cost," or minimum price that each seller is willing to accept. Assume that anyone who has a cost that equals the market price is willing to sell their used textbook. PRICE (Dollars per used textbook) 120 100 80 H+ 60 60 Y Latasha 40 X Jake ㅁ Frances 20 20 Dmitri 0 0 + Nick Rosa 1 2 3 4 5 6 QUANTITY (Used textbooks) ? Region X (the purple shaded area) represents total producer surplus when the market price is equal to $ area) represents when the market price while Region Y (the grey shaded In the following table, indicate which statements are true or false based on the information provided on the previous graph. Statement True False Assuming each seller receives a positive surplus, Dmitri will always receive more producer surplus than Frances. Producer surplus is smaller when the price is $70 than when it is $50. O O 0 O In order for Nick to earn a producer surplus of exactly $30 from selling a used textbook, the market price must be $
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Transcribed Image Text:6. Producer surplus and price changes
The following graph plots a supply curve (orange line) for a group of recent graduates looking to sell used finance textbooks. Each seller has only a
single used textbook available for sale. Think of each rectangular area beneath the supply curve as the "cost," or minimum price that each seller is
willing to accept. Assume that anyone who has a cost that equals the market price is willing to sell their used textbook.
PRICE (Dollars per used textbook)
120
100
80
H+
60
60
Y
Latasha
40
X
Jake
ㅁ
Frances
20
20
Dmitri
0
0
+
Nick
Rosa
1
2
3
4
5
6
QUANTITY (Used textbooks)
?
Region X (the purple shaded area) represents total producer surplus when the market price is equal to $
area) represents
when the market price
while Region Y (the grey shaded
In the following table, indicate which statements are true or false based on the information provided on the previous graph.
Statement
True
False
Assuming each seller receives a positive surplus, Dmitri will always receive more producer surplus than Frances.
Producer surplus is smaller when the price is $70 than when it is $50.
O
O
0
O
In order for Nick to earn a producer surplus of exactly $30 from selling a used textbook, the market price must be $
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