Suppose supply equation of maize is q = -2+3p a. Derive the equation of the producer surplus (PS) and compute the PS when price = 3 b. Suppose price is now equal to 2, compute corresponding PS. And what is the effect of the change in PS from p=3 to p=2 ?

Suppose supply equation of maize is q = -2+3p a. Derive the equation of the producer surplus (PS) and compute the PS when price = 3 b. Suppose price is now equal to 2, compute corresponding PS. And what is the effect of the change in PS from p=3 to p=2 ?

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter3: Supply And Demand: Theory

Section: Chapter Questions

Problem 1WNG

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Question

Suppose supply equation of maize is q = -2+3p

a. Derive the equation of the producer surplus (PS) and compute the PS when price = 3

b. Suppose price is now equal to 2, compute corresponding PS. And what is the effect of the change in PS from p=3 to p=2 ?

Definition Definition Producer’s gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price and up to the equilibrium quantity.

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