Question

A supply function is given by S(p)=4p. Its fixed costs are 100. If the price changes from 10 to 20, what is the change in its profits?

Answer 1

00000000000000000000

Answer 2

Answer:

Explanation:

At p=10, supply is 40 and 80 when p=20. Now, producer surplus is area in rectangle of 10*40 and 1/2*10*40. So, total = $600. This is same as the change in profits, since the fixed cost does not change.