When the Smiths were shopping for their present home, the asking price from the previous owner was $250,000.00. The Smiths had decided they would pay no more than $245,000.00 for the house. After negotiations, the Smiths actually purchased the house for $239,000.00. Therefore, the previous owner earned a producer surplus of
A) $250,000.00.
B) $11,000.00.
C) $5,000.00.
D) an amount unknown given the information in the question.

Question

Quizplus · Accepted Answer

The producer surplus is the difference between the price the seller is willing to accept and the price they actually receive. Since the minimum price the previous owner was willing to accept is not provided, the producer surplus cannot be determined.

When the Smiths Were Shopping for Their Present Home, the Asking