(Figure: Determining Surplus and Loss) In the graph, how much is producer surplus at a price of $5?

Question

Quizplus · Accepted Answer

At a price of $5, the quantity supplied is 7 and the quantity demanded is 10. The producer surplus is the area above the supply curve and below the market price, up to the quantity supplied. Thus, the producer surplus at a price of $5 is the triangle with base 7 and height (8-5) = 3, which is (1/2) x 7 x 3 = $10. Therefore, the correct answer is A) $30, which is the sum of the producer surplus at $4 ($20) and $5 ($10).

(Figure: Determining Surplus and Loss) in the Graph, How Much