7. Producer surplus in the short and long run The following graph shows the supply of (orange curve) and demand for (blue curve) DVD players. Determine the equilibrium price and quantity of DVD players. Based on this, use the green triangle (triangle symbols) to shade the area representing consumer surplus at the equilibrium price. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus at the equilibrium price. PRICE (Dollars per DVD player) 100 80 60 40 20 0 20 False True Supply Demand 40 60 80 100 QUANTITY (Millions of DVD players) D D CS PS Aa Aa Help Clear All Suppose the preceding graph represents the market for DVD players in the long run. True or False: The area between the price and the supply curve represents the profit firms earn on intramarginal units.

7. Producer surplus in the short and long run The following graph shows the supply of (orange curve) and demand for (blue curve) DVD players. Determine the equilibrium price and quantity of DVD players. Based on this, use the green triangle (triangle symbols) to shade the area representing consumer surplus at the equilibrium price. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus at the equilibrium price. PRICE (Dollars per DVD player) 100 80 60 40 20 0 20 False True Supply Demand 40 60 80 100 QUANTITY (Millions of DVD players) D D CS PS Aa Aa Help Clear All Suppose the preceding graph represents the market for DVD players in the long run. True or False: The area between the price and the supply curve represents the profit firms earn on intramarginal units.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

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Answer completely.
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7. Producer surplus in the short and long run
The following graph shows the supply of (orange curve) and demand for (blue curve) DVD players.
Determine the equilibrium price and quantity of DVD players. Based on this, use the green triangle (triangle symbols)
to shade the area representing consumer surplus at the equilibrium price. Then, use the purple triangle (diamond
symbols) to shade the area representing producer surplus at the equilibrium price.
PRICE (Dollars per DVD player]
100
80
60
40
20
0
20
Supply
False
True
Demand
D D
CS
PS
40
60
80
100
QUANTITY (Millions of DVD players) Help Clear All
Suppose the preceding graph represents the market for DVD players in the long run.
Aa Aa
True or False: The area between the price and the supply curve represents the profit firms earn on intramarginal
units.

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Step 1: Define consumer, producer surplus.

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Step 2: Calculate the equilibrium price and quantity.

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Step 3: Graph the consumer surplus.

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Step 4: Graph the producer surplus.

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