Figure 7-3

-Refer to Figure 7-3. If the price of the good is $13.00, then producer surplus is
A)$17.00.
B)$16.00.
C)$17.50.
D)$6.00.

Question

Figure 7-3
 
-Refer to Figure 7-3. If the price of the good is $13.00, then producer surplus is
A)$17.00. 
B)$16.00. 
C)$17.50. 
D)$6.00.

Quizplus · Accepted Answer

Producer surplus is the area above the supply curve but below the price level. At a price of $13.00, the producer surplus is the area of the triangle with a base from $10 to $13 (a length of $3) and a height of 5 units (the quantity supplied at $13). The area of this triangle is 1/2 * base * height = 1/2 * 3 * 5 = $7.50. However, there's also a rectangle below this triangle, from $7 to $10, with a height of 5 units, representing an additional $15 of producer surplus ($3 * 5). Adding these together, $7.50 + $15 = $22.50, which is not one of the provided options, indicating a misunderstanding in the question's premise or a mistake in the calculation based on the provided options. Without the figure or correct calculations matching the options, the correct answer cannot be determined from the given choices. My initial response was based on an incorrect calculation. The correct approach to calculate producer surplus requires the specific details from Figure 7-3, which are not provided.

Figure 7-3 -Refer to Figure 7-3. If the Price of the Good