The figure shows the supply curve p = 4 + 2x and the market price ₹20. What is the area of the shaded region, the producer surplus? Supply curve p = 4 + 2x rising from (0, 4), a dashed price line p = 20, meeting at (8, 20); the triangle between the price line and the curve from x = 0 to 8 is shaded.

The figure shows the supply curve p = 4 + 2x…

The figure shows the supply curve p = 4 + 2x and the market price ₹20.

MediumOriginal question

The figure shows the supply curve $p = 4 + 2x$ and the market price ₹20. What is the area of the shaded region, the producer surplus?

₹64Correct answerYour answer₹96Correct answerYour answer₹128Correct answerYour answer₹160Correct answerYour answer

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CorrectNot quiteAnswer A

Correct answer: A

The price line meets the supply curve where $4 + 2x = 20$ , at $x_0 = 8$ .
The shaded triangle has base 8 and height $20 - 4 = 16$ : area $\frac{1}{2} \times 8 \times 16 = 64$ rupees.

Worth noting

₹96 is the area under the supply curve, $\int_{0}^{8} (4 + 2x)\,dx$ , not the region above it.

Ten questions from Consumer & Producer Surplus, at your own pace.

Ten questions from Consumer & Producer Surplus, at your own pace.