Question

the area below the equilibrium price and above the supply curve is known as ?

the area below the equilibrium price and above the supply curve is known as ?

Homework Answers

Answer #1

In the above diagram, E is the equilibrium point. The shaded region is the area which is below the equilibrium price and above the supply curve which is called producer surplus. Producer surplus is the surplus which producer gets when he sells the good at a price which is higher than the price at which is willing to sell the good.

So, the area below the equilibrium price and above the supply curve is known as producer surplus.

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