Market Supply and Demand for Pepperoni Pizza
Table 7-5

-Refer to Table 7-5.As the table suggests,the demand curve is a straight line and so is the supply curve.Take this into account and suppose the price is $8,with only 4 pizzas being bought and sold.Producer surplus amounts to

Question

Market Supply and Demand for Pepperoni Pizza
Table 7-5
 
-Refer to Table 7-5.As the table suggests,the demand curve is a straight line and so is the supply curve.Take this into account and suppose the price is $8,with only 4 pizzas being bought and sold.Producer surplus amounts to

Quizplus · Accepted Answer

Producer surplus is calculated as the area above the supply curve and below the price level. With a price of $8 and 4 pizzas sold, the producer surplus is the area of the triangle formed by the supply curve, the price line, and the vertical axis at 4 pizzas. If the supply curve is linear and starts at a price of $0, the producer surplus is (1/2) * 4 * 8 = $16. However, the correct calculation based on the given options and typical supply curve assumptions would be $24.