An oil painting has a marginal cost of $1,000. The painting was bought for $1,500. How much producer surplus did the painter obtain?

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the price at which a good or service is sold and the cost of producing it. In this case, the painting was sold for $1,500, which is $500 more than the marginal cost of producing it ($1,000). Therefore, the painter's producer surplus is $500.

An Oil Painting Has a Marginal Cost of $1,000