Suppose that a customer's willingness-to-pay for a product is $5, and the seller's willingness-to-sell is $2. If the negotiated price is $3, producer surplus is $1.

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the price the seller receives and their willingness-to-sell. In this case, the seller's willingness-to-sell is $2 and they sell for $3, so their producer surplus is $1.

Suppose That a Customer's Willingness-To-Pay for a Product Is $5