Question

5. Producer surplus for a group of sellers The following graph shows the supply curve for a group of sellers in the U.S. market for laptops (orange line). Each seller has only one laptop to sell. The market price of a laptop is shown by the black horizontal line at $175. Each rectangle on the graph corresponds to a particular seller in this market: blue (circle symbols) for Kenji, green (triangle symbols) for Lucia, purple (diamond symbols) for Paolo, tan (dash symbols) for Sharon, and orange (square symbols) for Van. (Note: The name labels are to the right of the corresponding segment on the supply curve.) Use the rectangles to shade the areas representing producer surplus for each person who is willing to sell a laptop at a market price of $175. (Note: If person will not sell a laptop at the market price, indicate this by leaving his or her rectangle in its original position on the palette.) Van Kenji Lucia Sharon PRICE (Dollars per laptop) Market Price Paolo Paolo I . Lucia Sharon Kenji 0 1 2 6 7 8 Van 3 4 5 QUANTITY (Laptops)

Answer 1

price ($/ Laptop) Haan. 325 Sharon 225 . 175 market price 1257 ---|- --- m pacid ! LK 11 15 + - Lucia . 25 to 1 kemi e 1 2 3 4 5 Guantity (captops) At market price = $175 / Laptop, 3 sellers will Sell captops. Kenji's Producer Surplus = area abcd = $(175-25x1 $150 Lucia's PS= area bek2 = $(175-75)(2-1) = $100 pacio's Ps= area pmfe = $(175-125) x (3-2) = $50 Total producers surpws = $(150 + 100+50) = $300

Now market price 1 to $275. price ($/captop) van a b c d 275 t market price ...L I K Sharon Y PM 125 --- pacion 75 - 25 6 Ra Lucia kemi 1 2 3 4 - 5 Quantity (laptops) Now the number of sellers willing to sell Laptop increases to 4 : a. Kenni's Ps= area ab £6 = $(275-25)*(1-0) = $250 Lucia's Ps= area b c GR = $(275 - 75x (2-1) = $200 Pacio's Ps = area camp = $(275 - 125 x (3-2) = $150 Sharon's PS = area dekl= $(275 - 225x (4-3) = $50 Total Ps increases to $. (250 + 200+ 150 +50) - [6 6501