Producer surplus is:
A) the difference between the market price and the minimum price at which producers are willing to sell a good.
B) the amount at which producers are willing to sell a good.
C) the amount at which producers sell a good.
D) the amount at which producers are willing to sell a good plus the amount at which they sell it.

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the market price and the minimum price at which producers are willing to sell a good. It represents the benefit that producers receive from receiving a higher price than they were willing to accept. The amount at which producers are willing to sell a good (option B) is known as the reservation price. The actual selling price (option C) may or may not be the same as the reservation price. Option D is incorrect because the producer surplus is only the difference between the reservation price and the market price, not the sum of the two.

Producer Surplus Is