Table 5.3
$$\begin{array} { | l | c | }
\hline{ \begin{array} { c }
\text { The Waco Kid's } \
\text { Cowboy Hats }
\end{array} } & \begin{array} { c }
\text { Marginal Cost } \
\text { (dollars) }
\end{array} \
\hline \text { 1st hat } & 24 \
\hline \text { 2nd hat } & 30 \
\hline \text { 3rd hat } & 38 \
\hline \text { 4th hat } & 46 \
\hline
\end{array}$$
-Refer to Table 5.3.The table above lists the marginal cost of cowboy hats by The Waco Kid,a firm that specialises in producing fancy dress costumes.If the market price of The Waco Kid's cowboy hats is $40,__________.

Question

Table 5.3
 $$\begin{array} { | l | c | } 
\hline{ \begin{array} { c } 
\text { The Waco Kid's } \
\text { Cowboy Hats }
\end{array} } & \begin{array} { c } 
\text { Marginal Cost } \
\text { (dollars) }
\end{array} \
\hline \text { 1st hat } & 24 \
\hline \text { 2nd hat } & 30 \
\hline \text { 3rd hat } & 38 \
\hline \text { 4th hat } & 46 \
\hline
\end{array}$$
-Refer to Table 5.3.The table above lists the marginal cost of cowboy hats by The Waco Kid,a firm that specialises in producing fancy dress costumes.If the market price of The Waco Kid's cowboy hats is $40,__________.

Quizplus · Accepted Answer

The producer surplus is the difference between the market price and the marginal cost for each unit produced. For the first three hats, the surplus is $16 ($40-$24), $10 ($40-$30), and $2 ($40-$38) respectively, totaling $28. The fourth hat would not be produced as its marginal cost ($46) exceeds the market price ($40).

Table 53 -Refer to Table 5