<p>I think you misunderstood what the supply line represents. The function takes as its argument the number of units sold. It then returns the lowest price which the supplier of the last unit requires such that he is willing to sell.</p>

<p>Thus, the profit would not be $10*5$. Instead, the last person willing to sell the good receives 0 profit as he is selling at the lowest price he is willing to accept. Counting in discrete units, we would have something like $10+7.5+5+2.5+0=25$ profit. Each additional seller of a unit makes less profit than the previous one.</p>

<p>The flaw in your logic was that the first seller can really only provide a single unit at price 10 and not 5 units. The next unit already costs a bit more in production all the way till the last unit makes its producer just break even.</p>

CC BY-SA 3.0
2015-09-30T06:05:18.120Z
+1  Just one small point re your last paragraph: as the graph is drawn, price 10 corresponds to zero units.  A single unit would be provided at price 12.
Adam Bailey
CC BY-SA 3.0
2015-09-30T07:23:55.313Z
indeed, based on the graph the goods (if sold discretely at the integral of the supply function in that area) are sold at prices 9, 7, 5, 3, 1. But then again, technically we should not count the goods in units but treat these as volumes which apparently was the source of confusion of OP.
HRSE
CC BY-SA 3.0
2015-09-30T02:31:24.557Z
2015-09-30T02:31:24.557Z
HRSE
<p>I'd like to ask a question about  producer surplus. Basically I got the concept and how we calculate when a demand or price changes on a graph, but I cannot figure out how I should apply to real life.</p>

<p>I mean, let's say A = 10, B = 20 and Q = 5.</p>

<p>At first the producers accept to sell at the price $10. Is that right? </p>

<p>And the revenue they get would be  <span class="math-container">$10 \cdot 5 = 50 $</span>   but the producers managed to sell at the price of 20 and the revenue they get is  <span class="math-container">$ 20 \cdot 5 = 100$</span>.  </p>

<p>And the difference between what the producers get and what the producers would ask for is <span class="math-container">$100 - 50 = 50$</span>.</p>

<p>But when I calculate producer surplus using graphic (ABC), I get  <span class="math-container">$\frac{(20 -10 ) \cdot 5} { 2 } = 25 $</span>  </p>

<p>So I come to different conclusion in real life than when I calculate using graph. Why? Could anyone explain to me please?</p>

<p><a href="https://i.sstatic.net/QyuzU.jpg" rel="nofollow noreferrer"><img src="https://i.sstatic.net/QyuzU.jpg" alt="enter image description here"></a> </p>

<producer-surplus>
Real life producer surplus
Mrt
# Real life producer surplus

(Asked by: username_0 on 2015-09-30)

I'd like to ask a question about producer surplus. Basically I got the concept and how we calculate when a demand or price changes on a graph, but I cannot figure out how I should apply to real life.

I mean, let's say A = 10, B = 20 and Q = 5.

At first the producers accept to sell at the price $10. Is that right?

And the revenue they get would be $10 \cdot 5 = 50 $ but the producers managed to sell at the price of 20 and the revenue they get is $ 20 \cdot 5 = 100$.

And the difference between what the producers get and what the producers would ask for is $100 - 50 = 50$.

But when I calculate producer surplus using graphic (ABC), I get $\frac{(20 -10 ) \cdot 5} { 2 } = 25 $

So I come to different conclusion in real life than when I calculate using graph. Why? Could anyone explain to me please?

[![enter image description here](https://i.sstatic.net/QyuzU.jpg)](https://i.sstatic.net/QyuzU.jpg)

**Tags:** producer-surplus


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## 1 answers

### Answer by username_1 on 2015-09-30. Score: 5 | Accepted answer

I think you misunderstood what the supply line represents. The function takes as its argument the number of units sold. It then returns the lowest price which the supplier of the last unit requires such that he is willing to sell.

Thus, the profit would not be $10\*5$. Instead, the last person willing to sell the good receives 0 profit as he is selling at the lowest price he is willing to accept. Counting in discrete units, we would have something like $10+7.5+5+2.5+0=25$ profit. Each additional seller of a unit makes less profit than the previous one.

The flaw in your logic was that the first seller can really only provide a single unit at price 10 and not 5 units. The next unit already costs a bit more in production all the way till the last unit makes its producer just break even.

> **Comments:**
> **username_2**: +1  Just one small point re your last paragraph: as the graph is drawn, price 10 corresponds to zero units.  A single unit would be provided at price 12.  
> **username_1**: indeed, based on the graph the goods (if sold discretely at the integral of the supply function in that area) are sold at prices 9, 7, 5, 3, 1. But then again, technically we should not count the goods in units but treat these as volumes which apparently was the source of confusion of OP.  

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