If the supply curve is perfectly inelastic then it is vertical as no matter what the price is supply will be same. Producer surplus is area below equilibrium price and above supply curve. so in case of vertical supply curve what is the producer surplus. Please explain geometrically by using areas and also give some intuition behind the stated answer.
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$\begingroup$ Producer surplus is revenue he is getting - his willingness to sell that product at some price(the supply curve). So here he is even willing to supply at negative infinity and he is getting some positive price in market...so his surplus is infinite..is this correct? $\endgroup$– SHIVAM GUPTAAug 27, 2020 at 15:32
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$\begingroup$ no I encourage you to read the +1 answer of alecos - I think that would make it clear. In the end there will be a bound for the integral for PS which is an analogue to CS except now you are finding area below EQ price. The integral will have some bounds at some price. I don’t think for example I ever saw an inelastic supply that would extend to IV quadrant in that case the lower bound would be P=0. If the supplier is willing to supply at a negative price I would say that would have to be mentioned in a problem unless it would be some sort of gotcha question $\endgroup$– 1muflon1 ♦Aug 27, 2020 at 15:45
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$\begingroup$ Ok so if we put a lower bound of 0 then PS will be a rectangle..is this right? $\endgroup$– SHIVAM GUPTAAug 27, 2020 at 15:47
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$\begingroup$ yes in that case it would be a rectangle $\endgroup$– 1muflon1 ♦Aug 27, 2020 at 15:48
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$\begingroup$ Ok, Thanks for your comments. $\endgroup$– SHIVAM GUPTAAug 27, 2020 at 15:52
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