Microeconomics chapter 4 continued 1. Producer Surplus and the Supply Curve-Cost and Producer Surplus • The lowest price at which the seller is willing to sell is the sellers cost • There is an opportunity cost to selling a textbook even if the owner has completed the course for which it was required • Individual producer surplus is the net gain to an individual seller from selling a good. It is equal to the difference between the price received and the sellers cost • Total producer surplus is the net market sum of the individual producer surpluses of a good in a market. • Graphically represented: The height of the step is the cost and the vertical is the price he received • The total producer surplus from sales of a good at a given price is the area above te supply curve but below the price 2. How prices changing affect the producer surplus-Although a fall in price increases consumer surplus it reduces producer surplus and a rise in price reduces consumer surplus but increases producer surplus
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This note was uploaded on 10/09/2011 for the course ECO 2023 taught by Professor Underwood-caputo during the Spring '08 term at University of Central Florida.