Table 7-9
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.

-Refer to Table 7-9.The equilibrium market price for 10 piano lessons is $300.What is the total producer surplus in the market?
A) $50
B) $150
C) $1,050
D) $1,500

Question

Table 7-9
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.
 
-Refer to Table 7-9.The equilibrium market price for 10 piano lessons is $300.What is the total producer surplus in the market?
A) $50 
B) $150 
C) $1,050 
D) $1,500

Quizplus · Accepted Answer

To calculate producer surplus, we need to find the area above the supply curve and below the equilibrium price. In this case, the area is a triangle with base 10 (the quantity supplied) and height $150 (the difference between the equilibrium price of $300 and the minimum supply price of $150). The area of this triangle is (1/2) x 10 x $150 = $750. Therefore, the total producer surplus in the market is $750. Choice B is the correct answer.

Table 7-9 The Numbers Reveal the Opportunity Costs of Providing 10 Piano