Which of the following is true about producer surplus?
A)Producer surplus is how much more it costs sellers than they are paid.
B)Producer surplus is shown graphically as the area under the demand curve but above the supply curve.
C)An increase in the market price due to an increase in demand will increase producer surplus.
D)All of the above are true about producer surplus.

Question

Which of the following is true about producer surplus?
A)​Producer surplus is how much more it costs sellers than they are paid.
B)​Producer surplus is shown graphically as the area under the demand curve but above the supply curve.
C)​An increase in the market price due to an increase in demand will increase producer surplus.
D)​All of the above are true about producer surplus.

Quizplus · Accepted Answer

Producer surplus is the difference between the amount a seller receives for a good and the minimum amount they would have been willing to accept. An increase in the market price due to an increase in demand will increase producer surplus, as producers are able to sell goods at a higher price than they would have originally accepted. Choice A is incorrect, as producer surplus is the amount that sellers are paid minus their costs. Choice B is partially correct, as producer surplus is shown graphically as the area above the supply curve but below the market price.

Which of the Following Is True About Producer Surplus