According to the graph shown,producer surplus is:
A) $36.
B) $48.
C) $120.
D) None of these.

Question

According to the graph shown,producer surplus is:
A) $36. 
B) $48. 
C) $120. 
D) None of these.

Quizplus · Accepted Answer

Producer surplus is the area above the supply curve and below the equilibrium price. In this graph, the equilibrium price is $12 and the supply curve intersects the vertical axis at a price of $4. The area of the triangle formed by the supply curve, the equilibrium price, and the vertical axis is (1/2)(8)(12-4) = $32.

However, we need to account for the fact that the supply curve extends beyond the equilibrium quantity of 6. The rectangle formed by the supply curve and the quantity axis has an area of 4 x 4 = $16. Therefore, the total producer surplus is $32 + $16 = $48.

Option B is the correct answer.

According to the Graph Shown,producer Surplus Is