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Lecture

MAT136H1 Lecture Notes - Economic Surplus, Demand Curve

Department
Mathematics
Course Code
MAT136H1
Professor
all

This preview shows half of the first page. to view the full 1 pages of the document. 8.4 Challenging Integral Applications
Economics & Biology Applications
Question #3 (Medium): Producer Surplus Given a Supply Curve
Strategy
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   
Sample Question
If the supply function is modeled by the equation     , find the producer surplus when the
selling price is .
Solution
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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