- 6 Producer Surplus And Price Changes The Following Graph Shows The Supply Curve For A Group Of Students Looking To Sell 1 (116.22 KiB) Viewed 93 times
6. Producer surplus and price changes The following graph shows the supply curve for a group of students looking to sell used tablets. Each student has only one used tablet 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 tablet. ? 420 350 O Dina 280 Charles PRICE (Dollars per used tablet) 210 B it: Ana 140 A Yakov Simone 70 0 Rajiv 0 0 1 5 6 2 QUANTITY (Used tablets) Region A (the purple shaded area) represents the total producer surplus when the market price is $175, while Region B (the grey shaded area) represents the change in total producer surplus when the market price changes from $175 to $245. 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 $245 than when it is $175. O Assuming each student receives a positive surplus, Rajiv will always receive less producer surplus than Simone. O 0 In order for Dina to earn a producer surplus of exactly $105 from selling a used tablet, the market price needs to be $420