Use the figure below to answer the following question. Figure 5.3.3
-Consider the demand and supply curves in Figure 5.3.3.If the market is at the competitive equilibrium,which area in the diagram indicates producer surplus?
A)ABC
B)AEC
C)EBC
D)0BCD
E)0ECD

Question

Use the figure below to answer the following question.  Figure 5.3.3
-Consider the demand and supply curves in Figure 5.3.3.If the market is at the competitive equilibrium,which area in the diagram indicates producer surplus?
A)ABC 
B)AEC 
C)EBC 
D)0BCD 
E)0ECD

Quizplus · Accepted Answer

Producer surplus is the difference between the market price and the minimum price that producers are willing to accept for a given quantity of output. At the competitive equilibrium, the market price equals the minimum price that producers are willing to accept, which is the intersection of the supply curve and the marginal cost curve. Therefore, the area above the supply curve and below the market price (AEC) represents producer surplus.

Use the Figure Below to Answer the Following Question