Question

 6. Producer surplus and price changes

 The following graph shows the supply curve for a group of students looking to sell used finance textbooks. Each student has only one used textbook 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 textbook.

 Region A (the purple shaded area) represents the total producer surplus when the market price is _______  while Region B (the grey shaded area) represents _______  when the market price _______ .

 Complete the following table by indicating which statements are true or false based on the information provided on the previous graph.

 Statement True False

 Assuming each student receives a positive surplus, Dina will always receive less producer surplus than Gilberto.

 Producer surplus is larger when the price is $280 than when it is $200.

 In order for Lorenzo to earn a producer surplus of exactly $120 from selling a used textbook, the market price needs to be _______ 

Answer 1