How to find producer's surplus at the market equilibrium point if supply function is ?

Question

Christopher Agresta · Accepted Answer

Find equilibrium price #p_e# and quantity #x_e# then evaluate #int_0^(x_e) (p_e-(0.8x+18)) dx#

The producers surplus can be thought of as the area between the horizontal line at the equilibrium price and the supply curve from #0# to the equilibrium quantity.

In this problem solve #0.8x+18 = 554.4/(x+13# to get equilibrium quantity #x=9# whatever quantity units we are working in, tons, thousand items, bushels, whatever. (Note that: we reject the quantity solution #x=-44.5#).

At this quantity we find the price is #25.2# whatever monetary unit we are working in, dollars, thousand dollars, Yen, whatever.

Thus, the excess of producers is

#int_0^9 (25.2-(0.8x+18))dx = 32.4# monetary units.

Isabella Ackerman · Answer

undefined To find the producer's surplus at the market equilibrium point when the supply function is given, follow these steps:

1. Determine the market equilibrium point where the supply function intersects the demand function.
2. Calculate the equilibrium price and quantity.
3. Subtract the minimum supply price (the cost of production) from the equilibrium price to find the producer surplus per unit.
4. Multiply the producer surplus per unit by the equilibrium quantity to find the total producer surplus at the market equilibrium point.