Figure 9.5.2
-Refer to Figure 9.5.2 above. At free trade, domestic producer surplus would be:
A) $2,500.
B) $50,000.
C) $1,250,000.
D) $2,500,000.
E) $20,000,000.

Question

Figure 9.5.2
-Refer to Figure 9.5.2 above. At free trade, domestic producer surplus would be:
A) $2,500. 
B) $50,000. 
C) $1,250,000. 
D) $2,500,000. 
E) $20,000,000.

Quizplus · Accepted Answer

Producer surplus is the area above the supply curve but below the price level up to the quantity produced. At free trade, assuming the world price is lower than the domestic equilibrium price, domestic producers would produce up to the point where their supply curve meets the world price line. The area representing producer surplus would typically be a triangle or a trapezoid, depending on the exact shapes of the supply and demand curves and the price level. Without seeing Figure 9.5.2, the correct answer cannot be determined by the description alone. However, based on common outcomes in such scenarios, a middle value like $1,250,000 might be a plausible estimate for producer surplus, assuming it reflects a reasonable scale for the economy in question.

Figure 9.5.2 -Refer to Figure 9.5.2 Above. at Free Trade, Domestic Producer