09-05 Explain how governments try to encourage production of goods and services;such as education;that carry external benefits.
09-18 Providing Subsidies
Added Y axis line.

-The diagram above represents an industry.Assuming that the market structure for this industry is perfect competition,the producer surplus is shown by the area:
A)BEC
B)AEC
C)AFC
D)BED

Question

09-05 Explain how governments try to encourage production of goods and services;such as education;that carry external benefits.
 09-18 Providing Subsidies
Added Y axis line.
 
-The diagram above represents an industry.Assuming that the market structure for this industry is perfect competition,the producer surplus is shown by the area:
A)BEC 
B)AEC 
C)AFC 
D)BED

Quizplus · Accepted Answer

Producer surplus in a perfectly competitive market is represented by the area above the supply curve (which is the same as the marginal cost curve in perfect competition) and below the market price. In the given options, area BEC is the only one that fits this description, as it is above the supply curve and below the equilibrium price line.

09-05 Explain How Governments Try to Encourage Production of Goods