Answered: The following graph shows the supply…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Producer surplus for a group of sellers

The following graph shows the supply curve for a group of sellers in the U.S. market for smartphones (orange line). Each seller has only one smartphone to sell. The market price of a smartphone is shown by the black horizontal line at $90.

Each rectangle on the graph corresponds to a particular seller in this market: blue (circle symbols) for Jake, green (triangle symbols) for Latasha, purple (diamond symbols) for Nick, tan (dash symbols) for Rosa, and orange (square symbols) for Tim. (Note: The name labels are to the right of the corresponding segment on the supply curve.)

Use the rectangles to shade the areas representing producer surplus for each person who is willing to sell a smartphone at a market price of $90. (Note: If a person will not sell a smartphone at the market price, indicate this by leaving his or her rectangle in its original position on the palette.)

Based on the information on the preceding graph, you can tell that will sell smartphones at the given market price, and total producer surplus in this market will be

Suppose the market price of a smartphone decreases to $50.

On the following graph, use the rectangles once again to shade the areas representing producer surplus for each person who is willing to sell a smartphone at the new market price: blue (circle symbols) for Jake, green (triangle symbols) for Latasha, purple (diamond symbols) for Nick, tan (dash symbols) for Rosa, and orange (square symbols) for Tim. (Note: If a person will not sell a smartphone at the new market price, indicate this by leaving his or her rectangle in its original position on the palette.)

160
140
Jake
120
Tim
Rosa
100
Latasha
Market Price
80
Nick
Nick
60
40
Latasha
Rosa
20
Jake
1
2
3
4
5
7
8
Tim
QUANTITY (Smartphones)
Based on the information on the preceding graph, you can tell that
will sell smartphones at the given market price, and total
producer surplus in this market will be $
Suppose the market price of a smartphone decreases to $50.
PRICE (Dollars per smartphone)

160
140
Jake
Tim
120
Rosa
100
Latasha
80
Nick
Nick
60
Market Price
40
Latasha
Rosa
20
Jake
1
3
4
7
8
Tim
QUANTITY (Smartphones)
Based on the information in the second graph, when the market price of a smartphone decreases to $50, the number of sellers willing to sell a
smartphone
to
and total producer surplus
to $
PRICE (Dollars per smartphone)

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