Graph 10-2
This graph reflects the market for kiwifruit, where pesticide used by kiwifruit orchardists also unintentionally kills honey bees.
-Refer to Graph 10-2. The producer surplus derived from the most efficient kiwifruit production levels is represented by the area:
A) g
B) e + g
C) a + b
D) a + b + c

Question

Graph 10-2
  This graph reflects the market for kiwifruit, where pesticide used by kiwifruit orchardists also unintentionally kills honey bees.
-Refer to Graph 10-2. The producer surplus derived from the most efficient kiwifruit production levels is represented by the area:
A) g 
B) e + g 
C) a + b 
D) a + b + c

Quizplus · Accepted Answer

Producer surplus is the difference between the price a firm receives for its product and the minimum price at which it is willing to sell. In this graph, the most efficient kiwifruit production level is where the marginal cost curve intersects the demand curve at point E. The producer surplus at this level is represented by the area under the demand curve from point E to the y-axis (price) and above the marginal cost curve. This area is made up of two triangles: triangle a and triangle b. Therefore, the correct answer is C, which includes the area a and b.

Graph 10-2 This Graph Reflects the Market for Kiwifruit, Where