Producer Surplus

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  • Created by: lizaloo98
  • Created on: 07-04-16 16:06
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  • Producer Surplus
    • if the price increases, producer surplus increases as more producers are willing to supply at the new market price
    • in the price decreases, the producer surplus reduces as producers are less willing to be paid that price to supply a product
    • the producer surplus is a triangle that goes from (0,0)
    • exam answer
      • Original producer surplus is P1 E P New producer surplus is P2 F P Up to four marks for a correct diagram showing - correctly sloping supply curve (1) - original producer surplus P, P1, E (1) - new producer surplus P2, F, P OR shaded area (1) - reduced producer surplus P1, P2, F, E OR arrows, labels or annotation (1)

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