7. Producer surplus for an individual and a marketSuppose the market for apple pie is a perfectly competitive market—that is, sellers take the market price as given. Eric owns a restaurant where he sells apple pie. The following graph shows Eric's weekly supply curve, represented by the orange line. Point A represents a point along his supply curve. The price of apple pie is $3.00 per slice, as shown by the horizontal black line. Eric's Weekly Supply7.50G.75G.004501.75100Price2251.50Supplya.7510121420QUANTITY (Sices of apple pie)From the previous graph, you can tell that Eric is willing to supply his Sth slice of apple pie foreach week. Since he receives $3.00 perslice, the producer surplus he gains from supplying the Sth slice of apple pie isSuppose the price of apple pie were to rise to $3.75 per slice. At this higher price, Eric would receive a producer surplus offrom the Bthslice of apple pie he sells.The following graph shows the weekly market supply of apple pie in a small economy.Lise the purple point (diamond symbol) to shade the area representing producer surplus (PS) when the price (P) of apple pie is $3.00 per slice. Then,use the green point (triangle symbal) to shade the area representing additional producer surplus when the price rises to $3.75 per slice.Small Economy's Weckly Supply7504.75Intial PS (P-83.00)450Addisanal PS (P-$3.75)P-33.751.75100P-33.00225150a.m Supplym 100 120 140QUANTITY (Thousands of sices of apple pie)20200(aIS Jod smon) o

The producer surplus is the difference between the market cost and the least cost a producer is…

Answered: Producer surplus for an individual and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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7. Producer surplus for an individual and a market

Suppose the market for apple pie is a perfectly competitive market—that is, sellers take the market price as given. Eric owns a restaurant where he sells apple pie. The following graph shows Eric's weekly supply curve, represented by the orange line. Point A represents a point along his supply curve. The price of apple pie is $3.00 per slice, as shown by the horizontal black line.

Eric's Weekly Supply
7.50
G.75
G.00
450
1.75
100
Price
225
1.50
Supply
a.75
10
12
14
20
QUANTITY (Sices of apple pie)
From the previous graph, you can tell that Eric is willing to supply his Sth slice of apple pie for
each week. Since he receives $3.00 per
slice, the producer surplus he gains from supplying the Sth slice of apple pie is
Suppose the price of apple pie were to rise to $3.75 per slice. At this higher price, Eric would receive a producer surplus of
from the Bth
slice of apple pie he sells.
The following graph shows the weekly market supply of apple pie in a small economy.
Lise the purple point (diamond symbol) to shade the area representing producer surplus (PS) when the price (P) of apple pie is $3.00 per slice. Then,
use the green point (triangle symbal) to shade the area representing additional producer surplus when the price rises to $3.75 per slice.
Small Economy's Weckly Supply
750
4.75
Intial PS (P-83.00)
450
Addisanal PS (P-$3.75)
P-33.75
1.75
100
P-33.00
225
150
a.m Supply
m 100 120 140
QUANTITY (Thousands of sices of apple pie)
20
200
(aIS Jod smon) o

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