Question

Assume that the price ceiling is set at 10 million dollars, that the quantity supplied at this price is 2 thousand jet planes, and that the minimum price on the supply curve is 2 million dollars. Calculate the area of producer surplus.

Answer 1

Answer:

since you didn't include the graph, I cannot tell what the producer surplus area will be on the graph, but I can calculate total producer surplus in $:

total producer surplus = (actual price - minimum price that a producer is willing to accept) x total quantity supplied

• actual price = $10 million
• minimum price = $2 million
• quantity supplied = 2 million units

total producer surplus = ($10 million - $2 million) x 2,000 jet planes = $8 million x 2,000 jet planes = $16,000 million