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2. Consider a group of students who are potential sellers of used text books. The table...

2. Consider a group of students who are potential sellers of used text books. The table below shows the price that they are willing to sell the books

Kisha 6

Dequan 18

Lashaundra 22

Deandre 30

Shanice 50

Draw the supply curve for used test books. If the market price per used text book is 25, what is the producers’ surplus of each individual? Depict this on the diagram.

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Answer #1

Ans) Willingness to sell is the minimum amount that a seller is ready to accept for his product. If market price is below willingness to sell, seller will not sell the product.

Further, if seller is able to sell his product at a price higher than his willingness to sell, then he is benefitted and this benefit is known as producer surplus.

Producer surplus(PS) = price - willingness to sell

PS of Kisha = 25-6 = $19

PS of Dequan = 25-18 = $7

PS of Lashaundra = 25-22 = $3

Deandre and shanice will not sell the book as their willingness to sell is higher than the market price.

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