For a supply function P = f(Qs) in fig above, If market equilibrium occurs at (Qo,
Po) then the producers who would supply at a lower price than equilibrium price Po,
benefit. The total gain to producers is called Producers’ Surplus and is designated
by the shaded area. Mathematically Producers’ surplus = QoPo - ∫
o
0
f(Qd)dQ
You are given the supply function P = (Q + 8)2 where the equilibrium price in the market
P0 = K500. What will the Equilibrium quantity be?
A) Q = -2
B) Q = -18
C) Q = -4
D) Q = 18
E) None of the above