Farmer Jones knows that the marginal cost to produce a carton of tomatoes is $5 per carton. He also knows that a consumer is willing to pay a maximum of $9 for the carton. The price of the carton is
$6 and Farmer Jones sells his carton for $6. On this carton, Farmer Jones earns a producer surplus equal to

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the price a producer is willing to accept and the price at which the product is actually sold. In this case, the producer is willing to accept $5 per carton, and the product is sold for $6. Therefore, the producer surplus is $1.

Farmer Jones Knows That the Marginal Cost to Produce a Carton