Donald produces nails at a cost of $200 per ton. If he sells the nails for $500 per ton, his producer surplus is:
A) $200 per ton
B) $300 per ton
C) $500 per ton
D) $700 per ton

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the price at which a producer sells a good and the cost of producing it.

In this case, Donald produces a ton of nails at a cost of $200 and sells it for $500. Therefore, his producer surplus is:

$500 - $200 = $300 per ton

Option A is incorrect because $200 is the cost of production, not the producer surplus.

Option C is incorrect because $500 is the selling price, not the producer surplus.

Option D is incorrect because it is a random number and not the actual producer surplus.

Donald Produces Nails at a Cost of $200 Per Ton