Map sapling learning Joey, David, Tracy, and Surly own one track bicycle apiece,
ID: 1168564 • Letter: M
Question
Map sapling learning Joey, David, Tracy, and Surly own one track bicycle apiece, and they've each modified to sell them as fixed- ear bikes or "fixies." Joey is willing to sell his bike at S100 or more. Likewise, David will sell his fixie for S150, racy at $200, and Surly for $350. Currently, all fixies sell for $250. On the graph below, move the gray Price line from S0 to the market price for fixies. Then create a bar graph by drawing each person's producer surplus (PS) by moving the areas assigned to each seller. Be sure to sort by the size of producer surplus, placing the seller with the largest producer surplus the furthest to the left. If a seller does not have a producer surplus at all, leave their shaded bar where it is. Maintain the orientation of each bar when creating the graph (i.e., the lower left corner of a bar should remain that bars lower left corner, and likewise for the other corners 500 The total producer surplus is 4500 Number 400 3500 3000 250 2000 150 100 Price 0 0.5 1.5 2 2,5 3 3,5 4 4.5 5 Quantity (number of fixiesExplanation / Answer
Market price of bicycle: $250
Joey
Selling price: $100
Producer surplus = Market price – producer price = $250-$100 = $150
David
Selling price: $150
Producer surplus = Market price – producer price = $250-$150 = $100
Tracy
Selling price: $200
Producer surplus = Market price – producer price = $250-$200 = $50
Surly
Selling price: $350
Producer surplus = Market price – producer price = $250-$350 = -$100