Econ101October10 - Econ 101 October 10, 2007 Producer...

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Econ 101 October 10, 2007 Producer Surplus: Difference between what seller got and what cost it took him to take product to market Individual producer surplus: Area above marginal cost curve and below market price = economic profits + fixed costs Marginal Producer Surplus = the difference between market price and marginal cost of given unit of production Producer surplus is not equal to economic profits o Producer surplus = economic profits + fixed costs o Producer surplus includes fixed cost Market Supply Curve: sum of quantities supplied by each seller at each market price o Reflects marginal costs of each of the producers in the market In market, where there are many identical sellers of same product, it is important to distinguish between “short term” and “long run” supply curve o We have been talking about short run because some factors were variable and some were fixed o Long run measures the quantities of a good or service offered for sale by all sellers-potential and actual- who could sell in the market
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This note was uploaded on 02/20/2008 for the course ECON 1110 taught by Professor Wissink during the Fall '06 term at Cornell University (Engineering School).

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Econ101October10 - Econ 101 October 10, 2007 Producer...

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