Exhibit 7-2 Refer to Exhibit 7-2.What is the total amount of producer surplus assuming this market reaches equilibrium?

Question

Exhibit 7-2  Refer to Exhibit 7-2.What is the total amount of producer surplus assuming this market reaches equilibrium?

Quizplus · Accepted Answer

Producer surplus can be calculated by finding the difference between the price received by producers and the minimum price they are willing to accept. At equilibrium, the price is $4.00, and the minimum price producers are willing to accept is $1.00. Thus, the producer surplus per unit is $3.00 ($4.00 - $1.00). At a quantity of 2 units, the total producer surplus is $6.00. Therefore, the correct answer is D.