The producer surplus in a market is the area above the price plus the area below the demand curve.

Question

Quizplus · Accepted Answer

This statement correctly defines producer surplus, which is the difference between the price a producer is willing to sell a product for and the actual price they receive, represented by the area above the price on the supply curve. The area below the demand curve represents the value that consumers receive from the product, but that the producers do not receive as surplus. Therefore, the total producer surplus is the area above the price plus the area below the demand curve.

The Producer Surplus in a Market Is the Area Above