Peter owns a sawmill and produces timber for construction.He sells the timber for $250 per cubic metre.His production costs are $90 per cubic metre.His producer surplus is:
A)$250 per cubic metre
B)$90 per cubic metre
C)$160 per cubic metre
D)none of the above

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the price at which a product or service is sold and the cost to produce it. In this case, Peter sells timber for $250 per cubic metre, but his production costs are $90 per cubic metre, so his producer surplus is $250 - $90 = $160 per cubic metre. Therefore, the correct answer is C.

Peter Owns a Sawmill and Produces Timber for Construction