The figure below shows the marginal cost (circles) and the average variable cost (crosses) of a firm in a competitive market. The firm always makes the choice to maximize its profit.

-Refer to the figure above. If the market price of the product is $5,000, what is the firm's producer surplus?
A) $30,000
B) $18,400
C) $13,700
D) $4,900

Question

The figure below shows the marginal cost (circles) and the average variable cost (crosses) of a firm in a competitive market. The firm always makes the choice to maximize its profit.
 
-Refer to the figure above. If the market price of the product is $5,000, what is the firm's producer surplus?
A) $30,000 
B) $18,400 
C) $13,700 
D) $4,900

Quizplus · Accepted Answer

Producer surplus is calculated as the area above the supply curve and below the market price. The correct choice is based on the given figure and calculations.

The Figure Below Shows the Marginal Cost (Circles) and the Average