When the Smiths were shopping for their present home, the asking price from the previous owner was $250,000. The Smiths had decided they would pay no more than $245,000 for the house. After negotiations, the Smiths actually purchased the house for $239,000. Therefore, the previous owner earned a producer surplus of
A) $250,000.
B) $5,000.
C) $11,000.
D) an unknown amount given the information provided in the question.

Question

Quizplus · Accepted Answer

The producer surplus is the difference between the price the seller is willing to accept and the price they actually receive. The seller's minimum acceptable price is not provided, so the producer surplus cannot be determined.

When the Smiths Were Shopping for Their Present Home, the Asking