using the figure to the right, fill in the table under the assumption that the rent ceiling is $1,050 (enter…

Explanation:

Step1: Recall producer - surplus formula

Producer surplus in competitive equilibrium is the area above the supply curve and below the equilibrium price. The equilibrium price is $1400$ and the supply curve starts at $700$. The equilibrium quantity is $2.40$ million. The formula for the area of a triangle (producer - surplus in competitive equilibrium) is $PS=\frac{1}{2}(P - P_{min})Q$, where $P$ is the equilibrium price, $P_{min}$ is the intercept of the supply - curve on the price - axis, and $Q$ is the equilibrium quantity.

Step2: Calculate producer surplus in competitive equilibrium

$P = 1400$, $P_{min}=700$, $Q = 2.40$ million. $PS_{competitive}=\frac{1}{2}(1400 - 700)\times2.40$ $=\frac{1}{2}\times700\times2.40$ $=840$ million.

Step3: Calculate producer surplus under rent control

Under rent control ($P = 1050$), the quantity supplied is $1.20$ million. The producer surplus is the area of the trapezoid formed by the supply curve, the price - axis, and the vertical line at the quantity supplied. The formula for the area of a trapezoid is $A=\frac{(a + b)h}{2}$, where $a$ and $b$ are the parallel sides and $h$ is the height. Here, $a = 1050$, $b = 700$, and $h = 1.20$ million. $PS_{rent - control}=\frac{(1050 + 700)\times1.20}{2}$ $=\frac{1750\times1.20}{2}$ $=1050$ million.

Answer:

In Competitive Equilibrium: $840$ million Under Rent Control: $1050$ million