6. 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. PRICE (Dollars per used smartphone) 420 350 280 210 140 70 D 0 0 Tim 0 1 A Alyssa 0 Brian 29 Crystal Edison 0 2 QUANTITY (Used smartphones) 0 6 Hilary 0 ? Region A (the purple shaded area) represents the total producer surplus when the market price is $210, while Region B (the grey shaded area) represents the change in total producer surplus when the market price changes from $210 to $245 In the following table, indicate which statements are true or false based on the information provided on the previous graph. Statement Producer surplus is larger when the price is $245 than when it is $210. Assuming each student receives a positive surplus, Tim will always receive more producer surplus than Alyssa. True False ● ● • O In order for Crystal to earn a producer surplus of exactly $35 from selling a used smartphone, the market price needs to be $
6. 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. PRICE (Dollars per used smartphone) 420 350 280 210 140 70 D 0 0 Tim 0 1 A Alyssa 0 Brian 29 Crystal Edison 0 2 QUANTITY (Used smartphones) 0 6 Hilary 0 ? Region A (the purple shaded area) represents the total producer surplus when the market price is $210, while Region B (the grey shaded area) represents the change in total producer surplus when the market price changes from $210 to $245 In the following table, indicate which statements are true or false based on the information provided on the previous graph. Statement Producer surplus is larger when the price is $245 than when it is $210. Assuming each student receives a positive surplus, Tim will always receive more producer surplus than Alyssa. True False ● ● • O In order for Crystal to earn a producer surplus of exactly $35 from selling a used smartphone, the market price needs to be $
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:6. 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.
PRICE (Dollars per used smartphone)
420 4
350
280
210
140
70
0
0
Tim
D
☐
1
B
A
Alyssa
■
➡+
Crystal
Brian
D
Edison
□
2
3
4
QUANTITY (Used smartphones)
☐
0
6
Hilary
0
6
(?)
Region A (the purple shaded area) represents the total producer surplus when the market price is
$210, while Region B (the grey shaded area) represents
the change in total producer surplus when the market price
changes from $210 to $245
In the following table, indicate which statements are true or false based on the information
provided on the previous graph.
Statement
Producer surplus is larger when the price is $245 than when it is $210.
Assuming each student receives a positive surplus, Tim will always receive
more producer surplus than Alyssa.
True False
O
●
O
In order for Crystal to earn a producer surplus of exactly $35 from selling a used smartphone, the
market price needs to be $
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