Assume the market depicted in the graph is in equilibrium. What is producer surplus?
A) $36
B) $48
C) $120
D) None of these are correct.

Question

Assume the market depicted in the graph is in equilibrium. What is producer surplus?
A) $36 
B) $48 
C) $120 
D) None of these are correct.

Quizplus · Accepted Answer

Producer surplus is the area above the supply curve and below the equilibrium price line. In this case, the producer surplus is the area of the triangle above $6 and below the supply curve, which is (1/2) x ($12-$4) x 4 = $32. However, since there are two producers in this market, the total producer surplus is $32 x 2 = $64. Therefore, none of the given options are correct.

Assume the Market Depicted in the Graph Is in Equilibrium