## Consumer and Producer Surplus

### 7. TRY IT

#### 7.1. Answers to Try It

1.

• $6,000 Incorrect The producer surplus is the area above the supply curve below the market price ($3). The area is [$(3-1) x 2000 ]/2=$2,000. Make sure you use the right formula to calculate the producer surplus. Don't confuse it with the social surplus that is the area below the demand curve and above the supply curve or the producer surplus + the consumer surplus..
• $2,000 Correct The producer surplus is the area above the supply curve below the market price ($3). The area is [$(3-1) x 2000 ]/2=$2,000.
• $4,000 Incorrect The producer surplus is the area above the supply curve below the market price ($3). The area is [$(3-1) x 2000 ]/2=$2,000. Make sure you use the right formula to calculate the producer surplus. Don't confuse it with the consumer surplus that is the area below the demand curve and above the market price line.

2.

• $4,000 Incorrect The social surplus is the area area below the demand curve and above the supply curve or the producer surplus + the consumer surplus. Make sure you use the right formula to calculate the producer and consumer surplus. •$12,000
Incorrect The social surplus is the area area below the demand curve and above the supply curve or the producer surplus + the consumer surplus. Make sure you use the right formula to calculate the producer and consumer surplus.
• $6,000 Correct. The social surplus is the area area below the demand curve and above the supply curve or the producer surplus + the consumer surplus.($3). The producer surplus is [$(3-1) x 2000]/2=$2,000. The consumer surplus is [($7-3) * 2000] 12 =$4000. The social surplus = \$6,000