Question

6. Producer surplus and price changes The following graph shows the supply curve for a group of students looking to sell used economics 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. Dina Charles ! PRICE (Dollars per used textbook) Ana Yakov Simone Rajiv QUANTITY (Used textbooks) . while Region B (the grey shaded area) Region A (the purple shaded area) represents the total producer surplus when the market price is $ represents when the market price

In the following table, indicate 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, Simone will always receive less producer surplus than Yakov.
Producer surplus is smaller when the price is $175 than when it is $125.

In order for Dina to earn a producer surplus of exactly $50 from selling a used textbook, the market price needs to be

.

Answer 1

Region A ( the purple shaded area......... $ 125, while region B represents the change in total surplus when the market price changes from $ 175 to $ 125

Assuming each student receives......... False

Producer surplus is smaller........... False

In order for Dina to earn a producer surplus of exactly $50 from selling a used textbook, the market price needs to be $ 275