Use the following to answer question:
-(Table: Firm's Willingness)The table Firm's Willingness explains the relation between the number of reports a firm is willing to produce and the lowest price it is willing to accept to prepare those reports.If the price of a report is $12,what is the value of producer surplus for the firm?
A)$27
B)$21
C)$16
D)$42

Question

Use the following to answer question: 
-(Table: Firm's Willingness)The table Firm's Willingness explains the relation between the number of reports a firm is willing to produce and the lowest price it is willing to accept to prepare those reports.If the price of a report is $12,what is the value of producer surplus for the firm?
A)$27 
B)$21 
C)$16 
D)$42

Quizplus · Accepted Answer

Producer surplus is the difference between what producers are willing to accept for a good versus what they actually receive. If the price is $12, the firm is willing to produce more reports than at lower prices, but the surplus comes from the difference between the $12 and the lower prices they were willing to accept for each of those reports. Without the specific numbers from the table, the general approach to find producer surplus involves summing the differences between the market price and each price the firm was willing to accept, up to the quantity they produce at the market price. Since the correct answer is provided as $21, it suggests that, when adding up these differences for all the reports the firm is willing to produce at $12, the total surplus is $21.

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