producer surplus

Question 1

define producer surplus

Answer 1

a measure of producer welfare which is the difference between the minimum price a producer a willing to sell a good for and the equilibrium price (market price) of the good

Question 2

how do you calculate producer surplus

Answer 2

taking the area of the triangle below the equilibrium price above the supply curve

Question 3

what causes a change in producer surplus

Answer 3

a shift of the DEMAND CURVE directly otherwise check change in qty. if it shifts outwards then prod. surplus increases an vise versa

Question 4

how do you calculate a change in producer surplus

Answer 4

final area of surplus- initial area of surplus. final could be lower than initial. negative surplus indicates loss of surplus.