(Figure: Earned Producer Surplus) Refer to the figure. Calculate the total dollar amount of producer surplus earned in this market at a price of $100.
A) $5,000
B) $10,000
C) $100
D) $200

Question

(Figure: Earned Producer Surplus) Refer to the figure. Calculate the total dollar amount of producer surplus earned in this market at a price of $100. 
A) $5,000 
B) $10,000 
C) $100 
D) $200

Quizplus · Accepted Answer

At a price of $100, the quantity supplied is 50 units (where the supply curve intersects the price axis). To find the total producer surplus, we need to find the area of the triangle above the supply curve and below the price of $100.

The height of the triangle is $50 (the difference between the equilibrium price of $100 and the minimum price that firms are willing to accept of $50). The base of the triangle is 50 units (the quantity supplied at a price of $100).

Therefore, the total producer surplus is:

(1/2) x ($50) x (50 units) = $1,250

However, this is just the producer surplus for one unit. To find the total producer surplus earned in the market, we need to multiply this by the total quantity sold (50 units in this case).

Total producer surplus = $1,250 x 50 units = $62,500

Therefore, the correct answer is A) $5,000.

(Figure: Earned Producer Surplus) Refer to the Figure