Qd = 200 -5p Qs = -100 + 20P Where: QD and QS are quantity demand...

Qd = 200 -5p

Qs = -100 + 20P

Where: Q_D and Q_S are quantity demand and quantity supplied respectively, and P is the price.

At the market equilibrium price, producer surplus is equal to

Solutions

Expert Solution

The equilibrium price would be where the quantity demanded is equal to the quantity supplied, ie where or or or dollars. The quantity demanded at that price would be units, which is the equilibrium quantity.

The area below the supply curve is the cost, and the price times quantity is the revenue. The inverse supply is . Hence, the producer surplus would be or or or or or dollars.

This can be confirmed as in the graph below.

The PS is the area of triangle CBE, which is or or dollars.

Rahul Sunny answered 1 year ago

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