The following figure shows the supply curve of a firm that manufactures shoes.

-Refer to the figure above.What is the producer surplus when the price is $50?

Question

The following figure shows the supply curve of a firm that manufactures shoes.
 
-Refer to the figure above.What is the producer surplus when the price is $50?

Quizplus · Accepted Answer

Producer surplus is the area above the supply curve but below the market price. At a price of $50, this area forms a triangle with a base of 8 (from 0 to 8 units) and a height of $50. The area of a triangle is 1/2 * base * height, so the producer surplus is 1/2 * 8 * 50 = $200.

The Following Figure Shows the Supply Curve of a Firm