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6 April, 22:03

MJM Products, Inc., designs and sells flannel jackets. The company is willing to sell a men’s flannel jacket for as little as $45. Its main competitor is RL Outriggers, which is willing to sell the same men’s flannel jacket for as little as $40. The current market price of that type of jacket is $57. What is the total producer surplus for the two firms?

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  1. 6 April, 22:30
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    Total Producer surplus = 29

    Explanation:

    given data

    sell jacket = $45

    sell jacket = $40

    current market price = $57

    to find out

    total producer surplus for the two firms

    solution

    we know producer surplus is the difference between the price of a good the producer is willing to accept for a product versus actual market price

    so

    Total Producer surplus = ($57 - $45) + ($57 - $40)

    Total Producer surplus = 12+17

    Total Producer surplus = 29
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