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Suppose five construction companies have the ability to build a factory overseas to produce a manufactured good. The marginal cost of building a factory for each construction company is shown in the table​ below: Producer Marginal Cost Company 1 ​$1,000,000 Company 2 ​$1,250,000 Company 3 ​$1,300,000 Company 4 ​$1,350,000 Company 5 ​$1,500,000 If the market price of an overseas factory is ​$ 1 470 000 ​, what is the surplus for these five​ companies?

Respuesta :

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Producer Surplus is difference between the pice at which producer is willling to spend and the price which he is getting from market for his product.
Minimum Price at which producer is willing to spend is Marginal Cost of producing that product.
Therefore, Producer surplus is
Market Price- Marginal Cost
Producer Marginal Cost Market Price Producer SurpusCompany 1 1,000,000 1,470,000 (1,470,000-1,000,000)=470,000Company 2 1,250,000 1,470,000 (1,470,000-1,250,000)=220,000Company 3 1,300,000 1,470,000 (1,470,000-1,300,000)=170,000Company 4 1,350,000 1,470,000 (1,470,000-1,350,000)=120,000Company 5 1,500,000 1,470,000 (1,470,000-1,500,000)=-30,000Total producer surplus= 470,000 + 220,000 + 170,000 + -30,000 = 830,000

The surplus for the five companies is amounting to $830,000

The surplus for the five companies is amounting to $830,000

What is the surplus for the five companies?

Producer Surplus is the difference between the price at which a producer is willing to spend and the price which he is getting from the market for his product.

The minimum price at which a producer is willing to spend is the Marginal Cost of producing that product.Therefore, Producer surplus is Market Price- Marginal CostProducer Marginal Cost Market Price Producer Surpus Company 1 1,000,000 1,470,000 (1,470,000-1,000,000)=470,000

Company 2 1,250,000 1,470,000 (1,470,000-1,250,000)=220,000

Company 3 1,300,000 1,470,000 (1,470,000-1,300,000)=170,000

Company 4 1,350,000 1,470,000 (1,470,000-1,350,000)=120,000

Company 5 1,500,000 1,470,000 (1,470,000-1,500,000)=-30,000

Total producer surplus= 470,000 + 220,000 + 170,000 + -30,000 = 830,000

The surplus for the five companies is amounting to $830,000

Learn more about surplus here: https://brainly.com/question/25135772

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