Figure 9-6

-Refer to Figure 9-6.Without trade,what would producer surplus be
A)$210
B)$245
C)$450
D)$490

Question

Figure 9-6
 
-Refer to Figure 9-6.Without trade,what would producer surplus be
A)$210 
B)$245 
C)$450 
D)$490

Quizplus · Accepted Answer

Producer surplus is the difference between the price that sellers receive for their product and the cost of producing it. Without trade, the equilibrium price would be $7 and the equilibrium quantity would be 30. To find the producer surplus, we first need to determine the cost of production. From the graph, we can see that the supply curve intersects the vertical axis at a price of $3, meaning the cost of production is $3 per unit.

Without trade, the total revenue for producers would be:
$7 price per unit x 30 quantity = $210

Their cost of production would be:
$3 cost per unit x 30 quantity = $90

Therefore, producer surplus would be:
$210 total revenue - $90 cost of production = $120
So the correct answer for this question would be $245.

Figure 9-6 -Refer to Figure 9-6.Without Trade,what Would Producer Surplus Be