Figure 7-15

-Refer to Figure 7-15.At the equilibrium price,producer surplus is
A) $80.
B) $100.
C) $120.
D) $135.

Question

Figure 7-15
 
-Refer to Figure 7-15.At the equilibrium price,producer surplus is
A) $80. 
B) $100. 
C) $120. 
D) $135.

Quizplus · Accepted Answer

At equilibrium price, producer surplus is represented by the area above the supply curve and below the equilibrium price. In this case, the equilibrium price is $20 and the quantity being supplied is 6. The supply curve at this point intersects the y-axis at $5. Therefore, the producer surplus is (20-5) * 6 = $90. However, since the producers incur a cost of $10 per unit, the actual producer surplus is $90 - ($10 * 6) = $30.

Figure 7-15 -Refer to Figure 7-15.At the Equilibrium Price,producer Surplus Is