Menu | <<<< | >>>> | Producer surplus an indicator that can be added to a VORSIM model

If you are building an economic model with prices and quantities, here is a simple way to calculation producer surplus changes from solution prices and quantities. With some planning, a producer surplus change calculation can be added as a model indicator. These formulas assume linear supply schedules but for modest changes in prices, they are even a reasonable approximation for non-linear supply schedules. The above diagram was drawn with VORPLOT, a simple program for drawing supply and demand diagrams that comes with VORSIM on the VORSIM CD.