Question

Firm | Production Costs |

Beca | $10 |

Rob | $7.50 |

Trisha | $6 |

Mike | $5.25 |

Steve | $5 |

Each firm below can produce only 1 pound of cookies. Suppose
this is the market for cookies and that demand is perfectly
elastic. Let the market clearing price be $6 per pound of cookies.
Suppose also that there is a $0.50 negative externality associated
with the consumption of a pound of cookies by the market. What is
the producer surplus in this market? (use algebra please) a. $1.75
b. $4

c. $5.50 d. $6

Answer #1

Solution: $1.75

Working:

Production cost Producr surplus = $6 -
Production cost

Becca 10 -4

Rob 7.5 -1.5

Trisha 6 0

Mike 5.25 0.75

Steve 5 1

Producer surplus = Mike 0.75 + Steve 1 = 1.75

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 5 minutes ago

asked 7 minutes ago

asked 11 minutes ago

asked 17 minutes ago

asked 29 minutes ago

asked 35 minutes ago

asked 43 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago