Let P represent price; let QS represent quantity supplied; and assume the equation of the supply curve is
If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

Question

Let P represent price; let QS represent quantity supplied; and assume the equation of the supply curve is
  If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

Quizplus · Accepted Answer

To find the producer surplus, we need to find the area below the price and above the supply curve up to the quantity of 90.

Using the equation, we can solve for the price when the quantity supplied is 90:

P = 10 + 0.5QS 
P = 10 + 0.5(90) 
P = 55

So the price at quantity 90 is $55.

To find the area, we need to calculate the difference between the market price ($55) and the minimum supply price (which we can find by plugging in 90 for QS in the supply equation):

Minimum supply price = 10 + 0.005(90)^2 = $46.50

Producer surplus = (55 - 46.50) * 90 = $765

This contradicts the statement given in the question that producer surplus amounts to $1,350. Therefore, the correct answer is B (False).

Let P Represent Price; Let QS Represent Quantity Supplied; and Assume