The total producer surplus for a good can be calculated as the:
A)sum of the individual consumer surpluses of all sellers of the good.
B)area below the supply curve for the good out to the quantity of the good sold.
C)area above the supply curve and below the price that sellers receive for the good being sold.
D)sum, for all sellers of the good, of the difference between what each seller receives and the maximum amount he or she is willing to accept for selling the good.

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the price that sellers receive for a good and the minimum amount they would be willing to accept for selling the good. This is represented by the area above the supply curve and below the price that sellers receive for the good being sold. Therefore, option C is the correct answer. Option A refers to consumer surplus, not producer surplus. Option B refers to the total revenue earned by sellers, not necessarily their surplus. Option D is incorrect because it uses the phrase "maximum amount he or she is willing to accept," which is the same as the minimum price they would be willing to sell for, and therefore confusing with the producer surplus definition.

The Total Producer Surplus for a Good Can Be Calculated