Question

The supply curve for a firm is $q=0.75p-3$
What is the producer surplus at price of Rs 8?

• A. Rs 6
• B. Rs 8
• C. Rs 10
• D. Rs 12

Answer 1

The correct option is A

Rs 6

The supply curve is $q=0.75p-3$
Corresponding to q=0, the supply curve meets the price axis at p= Rs 4.

At the intersection of the supply curve and the price line, price = Rs 8

Corresponding to p=Rs 8, the quantity supplied
$q=0.75\times 8-3=3$

Producer surplus is the area above the supply curve and under the price line.
$Producersurplus=\frac{1}{2}\times (8-4)\times 3Rs6$