Table 7-7
The following table represents the costs of five possible sellers.

-Refer to Table 7-7.If the market price is $1,000,the producer surplus in the market is
A) $700.
B) $750.
C) $2,250.
D) $3,700.

Question

Table 7-7
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-7.If the market price is $1,000,the producer surplus in the market is
A) $700. 
B) $750. 
C) $2,250. 
D) $3,700.

Quizplus · Accepted Answer

To calculate producer surplus, we need to find the difference between the market price and the seller's minimum supply price. For seller A, the minimum price is $600, so the producer surplus for seller A is $400 ($1000 - $600). For seller B, the minimum price is $300, so the producer surplus for seller B is $700 ($1000 - $300). For seller C, the minimum price is also $300, so the producer surplus for seller C is $700 ($1000 - $300). For seller D, the minimum price is $800, so producer surplus for seller D is only $200 ($1000 - $800). For seller E, the minimum price is $900, so producer surplus for seller E is only $100 ($1000 - $900).

Therefore, the total producer surplus for all five sellers is $400 + $700 + $700 + $200 + $100 = $2,100. The best choice(s) is B, which is the closest answer to $2,100.

Table 7-7 The Following Table Represents the Costs of Five Possible Sellers