Suppose that the market price for MP₃ players is $90 and MP₃players can be produced by firm X for $40 each. Producersurplus for this firm is $50 per MP₃ player.

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the market price and the cost of production. In this case, the market price is $90 and the cost of production for firm X is $40, so the producer surplus is $50 per MP₃ player. Therefore, the statement is true.

Suppose That the Market Price for MP3 Players Is $90

Suppose That the Market Price for MP₃ Players Is $90