Q.5 In the diagram, if the market price of coffee is $6, how much producer surpl

Question

Q.5  In the diagram, if the market price of coffee is $6, how much producer surplus do suppliers earn?
Q 7. Refer to the two figures. Which figure depicts the expectation that the future price will decrease?

Which figure depicts the effect of a new tax implemented on sellers?  

10. Scientists discover a new process for producing lab-grown beef that tastes exactly the

same as regular beef, but can be produced for half the price. What happens to the

market for cows in the short run?

(Figure: Equilibrium) Refer to the following figure. The equilibrium price and quantity are:

Explanation / Answer

Question 5

At price of $6 per cup of coffee, 25 cups of coffee are supplied.

Y-intercept of the supply curve = $1

Calculate the producer surplus -

Producer surplus = 1/2 * [Market price - Y intercept of supply curve] * Quantity supplied

Producer surplus = 1/2 * [$6 - $1] * 25

Producer surplus = 1/2 * $5 * 25 = $62.5

Thus,

The producer surplus that suppliers will earn is $62.50

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