Producer Surplus in the Long Run Homework Help

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Manufacturers or producers always want to make profit from selling their product in the market. After a vigorous market study, they can assume about the market and the consumer’s behaviors. On the basis of that assumption, they can fix a price rate of their product so that they can earn their desired profit. But in practical,price of a product is determined by demand and supply of the product in market. Hence, often producer’s assumption and planning does not work out.

In this condition, producers can earn more than of the desirable amount or less than of that. This different amount is referred as producer surplus. The feature and amount of it different in long- run and short -run, depending on a market condition.  If you want to explore your knowledge and make a bold concept about this subject topic for doing your homework properly, then you must take an immediate action for searching an effective producer surplus in the long run homework help.We are here to help you at every step!

In a nutshell

A manufacturer can make excess profit only when excessive demand exists in the market. In a graphical design,this amount is marked as a triangular shape under equilibrium price point and over the supply curve.

Hence, it depends on Supply curve, demand curve and equilibrium price.  Due to shifting of demand curve for enhancement of demand, this amount is increased. On the other hand reduction of demand in the market reduces this amount. But in the long run, scenario is changed totally.

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Producer surplus can be enhanced with an enhancement of supply in a market and increment of equilibrium price. But elasticity of supply is inversely proportioned with it. We all know that excess supply reduces the price of the product gradually.

In the long run in competitive market, elasticity of supply is increased in such a way that supply curve belongs on horizontal axis. No profit can be found only break even situation is exist in the market. In this situation amount of surplus is nil

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