Suppose the market supply curve is p=5Q at a price of 10 , producer surplus equals

Given a supply curve of p = 5q, the producer surplus is equal to $10

From this question we have been given the price to be = p = 10

The formula says p = 5Q

10 = 5Q

Therefore Q= 10/5

Q = 2

Using the formula of area of a triangle,

1/2 * Base * height

We have the base = 2

While the height = 10

1/2*10*2

0.5*20

= 10

Therefore given a supply curve of p = 5q, the producer surplus is equal to $10

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$10

Explanation:

The market supply curve is an upward sloping curve that depict the positive relationship that exists between the price and quantity supplied. It is derived by summing the quantity that the suppliers are willing to produce when the goods can be sold for a given price.

Suppose the market supply curve is p=5Q at a price of 10 , the producer surplus will be:

Producer surplus= (base × height)/2

Producer surplus = (2 × 10)/2

= 20/2

= $10

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