Suppose that last year the equilibrium price and the quantity of good x were $10 and 5 million pounds, respectively. because of strong demand this year, the equilibrium price and the quantity of good x are $12 and 7 million pounds, respectively. assuming that the supply curve of good x is linear, producer surplus:

Explanation:

Last year the equilibrium price and the quantity of good X were $10 and 5 million pounds, respectively.

The producer surplus is the difference between the minimum price that a producer is willing to accept and the price it actually gets. It can be found by calculating the area between the supply curve and the market price.

The producer surplus

=

=

=

= $25

Because of strong demand this year, the equilibrium price and the quantity of good X are $12 and 7 million pounds, respectively.

The producer surplus

=

=

=

= $42

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reducing the scale of the market for a new product.