Considering all costs of production, the marginal cost of producing a hot dog is $1.00. The price of a hot dog is $1.50. Thus, the producer surplus from this hot dog is
A) $1.00.
B) $1.50.
C) $0.50.
D) zero, because $1.50 is the most anyone would pay for a hot dog.

Question

Quizplus · Accepted Answer

Producer surplus is the difference between what a producer is willing to accept for a good versus what they actually receive. Here, the cost is $1.00, and the selling price is $1.50, so the surplus is $0.50.

Considering All Costs of Production, the Marginal Cost of Producing