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If the equilibrium price rises from $60 to $120, what is the additional producer surplus to initial producers in the market?

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Final answer:

When the equilibrium price increases, the initial producers gain additional producer surplus, with the calculation dependent on the shape of the supply curve and the original quantity supplied.

Step-by-step explanation:

The concept being asked about is related to the idea of producer surplus, which is a fundamental element of microeconomic theory. When the equilibrium price of a good rises, producers who are willing to supply the good at the lower price realize additional gains since they can now sell their goods at the higher price. This increase in revenue, above their willing supply price, contributes to an increase in their producer surplus.

To calculate the additional producer surplus for initial producers when the equilibrium price rises, one would need the supply curve for the good in question. The additional surplus would be represented by the area between the original equilibrium price and the new, higher price, up to the point where the original quantity supplied meets the supply curve. However, without specific information about the supply curve's shape or the actual costs to the producers, a numerical calculation cannot be provided. Instead, the general principle holds that the initial producers gain additional producer surplus equal to this area.

User Joseph Lennox
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Based on the graph I found in searching for similar question,
Equilibrium price of 60 has a quantity of 80.
Equilibrium price of 120 has a quantity of 160.

Additional producer surplus to initial producer is:

(120-60) * (160-80) = 60 * 80 = 4,800
User Rick Lancee
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