Assignment 1(C4P2)

Assignment 1(C4P2) - Karina Santana Microeconomics February...

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Karina Santana Microeconomics February 24, 2010 What is a producer surplus? How do we find the producer surplus? Why is it important to find the producer surplus? A producer surplus is The benefit that a producer receives for selling his/her good or service. We find the producer surplus by subtracting the good received from the minimum amount that the producer was willing to accept. It is important to find the producer surplus in order to determine how well the producer did during a certain transaction. When I had to determine the producer surplus for question two on the back of chapter four I automatically came up with the answer. On problem 2a, “Bob lists his old Lionel electric trains on eBay. He sets a minimum acceptable price, known as his reserve price, of $75. After five days of bidding, the final high bid is exactly $75” 1 , the producer surplus was 0. Bob surplus was zero because his reserve price was 75 and he received exactly 75 and if you were to subtract the two the answer is zero. In problem 2b,
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This note was uploaded on 10/12/2011 for the course ECON 2200 taught by Professor Sardy during the Spring '10 term at CUNY Brooklyn.

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Assignment 1(C4P2) - Karina Santana Microeconomics February...

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