A producer's minimum acceptable price for a particular unit of a good:
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equals the marginal cost of producing that particular unit.
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Graphically, if the supply and demand curves are linear, consumer surplus is measured as the triangle:
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under the demand curve and above the actual price
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Producer surplus:
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is the difference between the minimum prices producers are willing to accept for a product and the higher equilibrium price.
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As rationing mechanisms, prices
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are efficient, but long lines are inefficient.
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If a price floor is not binding, then
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there will be no effect on the market price or quantity sold.
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If the minimum wage exceeds the equilibrium wage, then
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the quantity supplied of labor will exceed the quantity demanded.
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Producer surplus measures the
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benefits to sellers of participating in a market.
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Suppose the demand for nachos increases. What will happen to producer surplus in the market for nachos?
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It increases.
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Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,
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the quantity demanded of physicals increases and the quantity supplied of physicals decreases
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The minimum wage, if it is binding, raises the incomes of
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only those workers who have jobs
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Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?
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sellers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor
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Which of the following will cause an increase in producer surplus?
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the price of a substitute increases
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