(Figure: Supply Curve) Use the graph of a supply curve for jugs of laundry detergent to answer the question.
If 18 jugs are sold at a price of $20, what is the total producer surplus?

A)$0
B)$15
C)$135
D)$270

Question

(Figure: Supply Curve) Use the graph of a supply curve for jugs of laundry detergent to answer the question.
If 18 jugs are sold at a price of $20, what is the total producer surplus?

A)$0 
B)$15 
C)$135 
D)$270

Quizplus · Accepted Answer

To calculate producer surplus, we need to find the area above the supply curve and below the market price (in this case, $20) up to the quantity sold (in this case, 18). The height of the rectangle formed by the difference between the market price and the supply curve is $20 - $5 = $15. The width of the rectangle is 18 (the quantity sold). Therefore, the total producer surplus is 15 * 18 = $270. The correct answer choice is (C).

(Figure: Supply Curve) Use the Graph of a Supply Curve