Stefano has just completed an original oil painting. After considering the cost of brushes, paint, canvas, and the value of Stefano's labour time, the marginal cost of the painting is $1,000. Lucky Stefano. One art lover paid him $1,500. How much producer surplus did Stefano obtain?
A) The amount of producer surplus cannot be determined from the information given.
B) $1,500
C) $500
D) $1,000

Question

Quizplus · Accepted Answer

Producer surplus is the difference between what a producer is paid for a good and the producer's marginal cost of producing it. Stefano was paid $1,500 for the painting, and the marginal cost was $1,000, so the producer surplus is $1,500 - $1,000 = $500.

Stefano Has Just Completed an Original Oil Painting