Figure: A Supply Curve Refer to the figure. Producer surplus at a price of $40 is:

Question

Figure: A Supply Curve  Refer to the figure. Producer surplus at a price of $40 is:

Quizplus · Accepted Answer

To calculate producer surplus at a price of $40, we need to find the area above the supply curve and below the price line, up to the quantity sold at a price of $40.

The quantity sold at a price of $40 is shown as Q on the x-axis. We can see that at this quantity, the supply curve intersects the price line at point S.

The producer surplus is then given by the area of the triangle formed by points P, S, and the y-axis. The height of this triangle is equal to the vertical distance between points P and S, which is $10. The base of the triangle is equal to the quantity Q.

Therefore, the producer surplus at a price of $40 is:

Producer surplus = (1/2) x base x height
= (1/2) x Q x $10
= (1/2) x 20 x $10
= $100

So, the correct answer is B) $100.

Figure: a Supply Curve Refer to the Figure