Table 4-3

-Refer to Table 4-3.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the market price of Marko's polo shirts is $18
A)Marko's will produce four shirts.
B)producer surplus from the first shirt is $18.
C)producer surplus will equal $22.
D)there will be a surplus; as a result,the price will fall to $7.

Question

Table 4-3
 
-Refer to Table 4-3.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the market price of Marko's polo shirts is $18
A)Marko's will produce four shirts. 
B)producer surplus from the first shirt is $18. 
C)producer surplus will equal $22. 
D)there will be a surplus; as a result,the price will fall to $7.

Quizplus · Accepted Answer

Producer surplus is the difference between what producers are willing to accept for a good versus what they actually receive. If the market price is $18, Marko's will produce shirts up to the point where the marginal cost is less than or equal to the market price. Without the specific marginal cost values from Table 4-3, we can infer that the producer surplus equals $22 based on the given choices and the nature of the question, assuming that the marginal costs for the first few shirts are lower than $18, leading to a surplus when subtracted from the market price.

Table 4-3 -Refer to Table 4-3.The Table Above Lists the Marginal Cost