00:01
Okay, so the question asks, what is the definition of producer's surplus? so the definition of producers support say that it is a difference between the price the firm is willing to accept and the price of the firm really accept or the market price.
00:15
So we know that at a given market, there will be a market price, probably we say p -star.
00:21
And also we know that there's a supply curve which should be upward sloping.
00:24
And at this given equivalent price, p -star, we know that the total cost, quantity the market -wide supply is q -star.
00:36
Okay, so what do you mean by producers? let's think about the very first unit of the good.
00:43
And in the very first unit of goods, the marginal cost of the grid is pretty low.
00:48
So the price, the firm is willing to accept, is also very low.
00:52
It probably means this p1 here.
00:54
Okay, so what is the producer surplus of this very first unit? it is a different of this market price p -star.
01:04
And the marginal cost of this first unit p1.
01:07
So this is for the very first unit, p star, p -star minus p -1 will be the producer surplus...