CHAPTER 7CONSUMERS, PRODUCERS, AND THE EFFICIENCY OF MARKETS149USING THE SUPPLY CURVE TO MEASUREPRODUCER SURPLUSJust as consumer surplus is closely related to the demand curve, producer surplusis closely related to the supply curve. To see how, let’s continue our example.We begin by using the costs of the four painters to find the supply schedule forpainting services. Table 7-4 shows the supply schedule that corresponds to thecosts in Table 7-3. If the price is below $500, none of the four painters is willing todo the job, so the quantity supplied is zero. If the price is between $500 and $600,only Grandma is willing to do the job, so the quantity supplied is 1. If the price isbetween $600 and $800, Grandma and Georgia are willing to do the job, so thequantity supplied is 2, and so on. Thus, the supply schedule is derived from thecosts of the four painters.
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This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.