The supply curve for product X is given by QXS 420 10PX a

The supply curve for product X is given by QXS = -420 + 10PX . a. Find the inverse supply curve. P = + Q b. How much surplus do producers receive when Qx = 420? When Qx = 960? When QX = 420: $ When QX = 960: $

Solution

Qs is given by Qs = -420 + 10Px

Then the inverse supply function will be

10Px = Qs + 420 or

Px = 0.1Qs + 42

At Q = 0 P = 42

At Q = 420, P = 84

Then Surplus = 0.5*(84-42)*420 = 8820

At Q = 0 P = 42

At Q = 960, P = 138

Then Surplus = 0.5*(138-42)*960 = 46080