Considering all costs of production, the marginal cost of producing a hot dog is $1.00. The price of a hot dog is $1.50. Thus, the producer surplus from this hot dog is
A) $1.50.
B) $1.00.
C) $.50.
D) Zero, because $1.50 is the most anyone would pay for a hot dog.

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the price received for a good and the marginal cost of producing it. Here, the producer surplus is $1.50 (price) - $1.00 (marginal cost) = $0.50.

Considering All Costs of Production, the Marginal Cost of Producing