What is meant by producer surplus? How is producer surplus in a competitive market calculated?
What will be an ideal response?
Producer surplus is the difference between the supply curve and the price the consumer pays. Graphically, producer surplus is calculated as the area above the supply curve and below the equilibrium price.
You might also like to view...
One reason the demand curve slopes ________ is that as prices fall ________.
A. upward; fewer people find that the price is now less than their reservation price. B. downward; fewer people find that the price is now less than their reservation price. C. downward; more people find that the price is now less than their reservation price. D. upward; more people find that the price is now less than their reservation price.
Which of the following increases labor productivity?
A) decreases in the availability of computers and factory buildings B) a decline in the health of the population C) inventions of new machinery, equipment, or software D) an increase in the aggregate hours of work
In 1990, there were 50 bilateral agreements and regional trade agreements between countries. Today there are
A) more than 230 of these agreements. B) 30 of these agreements. C) none of these agreements remaining. D) more than 10,000 of these agreements.
A country that must decrease production of one good in order to increase the production of another
A) must be using resources inefficiently. B) must be producing on its production possibilities frontier. C) must be producing beyond its production possibilities frontier. D) must have private ownership of property.