MAT136H1 Lecture Notes - Economic Surplus, Demand Curve
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8.4 Challenging Integral Applications
Economics & Biology Applications
Question #3 (Medium): Producer Surplus Given a Supply Curve
Consumer Surplus is how much consumer (ie. buyer) saves when the demand curve lies above the
selling price. So it is given by
, where is the
number sold. On the other hand from the merchant’s perspective, they gain when the supply curve lies
below the selling price. Thus, the Producer Surplus is given by
If the supply function is modeled by the equation , find the producer surplus when the
selling price is .
Producer surplus is given by
. is the number sold at the selling price , given the price
function . First the number sold needs to be determined based on the information given. Selling at
, the number sold is: ;
; , however since it is
number sold, only positive works, thus . Then the producer surplus is:
Therefore, given the supply curve of when the item is selling at the producer
surplus is .
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