Producer surplus and price changesThe following graph shows the supply curve for a group of students looking to sell used smartphones. Each student has only one used smartphone to sell. Each rectangular segment under the supply curve represents the “cost,” or minimum acceptable price, for one student. Assume that anyone who has a cost just equal to the market price is willing to sell his or her used smartphone. 2406, 1802005,1804,160Lucia160Kenji4,140120В3,100%23Ginny3,80O 4,1002,80A O801, 60Eric2, 60Cho400,201,20Bob1245QUANTITY (Used smartphones)Region A (the purple shaded area) represents the total producer surplus when the market price is $while Region B (the grey shaded area)change in total producer surplus / the total producer surplusrepresentswhen the market pricechange from $100 to $140, is $100, change from $160 to $140, is $140In the following table, indicate which statements are true or false based on the information provided on the previous graph.StatementTrueFalseProducer surplus is smaller when the price is $140 than when it is $100.Assuming each student receives a positive surplus, Bob will always receive less producer surplus than Cho.In order for Lucia to earn a producer surplus of exactly $60 from selling a used smartphone, the market price needs to be $PRICE (Dollars per used smartphone)

Producer surplus (PS) is a microeconomic concept that corresponds to the gains to a seller which…

Answered: Region A (the purple shaded area)…

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 and price changes

The following graph shows the supply curve for a group of students looking to sell used smartphones. Each student has only one used smartphone to sell. Each rectangular segment under the supply curve represents the “cost,” or minimum acceptable price, for one student. Assume that anyone who has a cost just equal to the market price is willing to sell his or her used smartphone.

240
6, 180
200
5,180
4,160
Lucia
160
Kenji
4,140
120
В
3,100
%23
Ginny
3,80
O 4,100
2,80
A O
80
1, 60
Eric
2, 60
Cho
40
0,20
1,20
Bob
1
2
4
5
QUANTITY (Used smartphones)
Region A (the purple shaded area) represents the total producer surplus when the market price is $
while Region B (the grey shaded area)
change in total producer surplus / the total producer surplus
represents
when the market price
change from $100 to $140, is $100, change from $160 to $140, is $140
In the following table, indicate which statements are true or false based on the information provided on the previous graph.
Statement
True
False
Producer surplus is smaller when the price is $140 than when it is $100.
Assuming each student receives a positive surplus, Bob will always receive less producer surplus than Cho.
In order for Lucia to earn a producer surplus of exactly $60 from selling a used smartphone, the market price needs to be $
PRICE (Dollars per used smartphone)

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