If a producer is willing to receive at least $5 for a pen that she manufactures but she actually receives $7 for it. The producer surplus of the pen for that producer is
A)$5.
B)$2.
C)$7.
D)-$5.

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the price a producer is willing to receive and the price they actually receive.

Producer surplus = Actual price received - Minimum price willing to accept

Therefore, in this case,

Producer surplus = $7 - $5 = $2

So, the correct choice is B.

If a Producer Is Willing to Receive at Least $5