Suppose a firm receives $10 for selling one additional unit of its product but that additional unit costs the firm $1 to produce. The producer surplus for the additional unit of product is
A)$1.
B)$5.5.
C)$9.
D)$11.
E)$110.

Question

Quizplus · Accepted Answer

Producer surplus is the difference between what a producer is paid for a good and the cost of producing that good. In this case, the firm is paid $10 and it costs $1 to produce, so the producer surplus is $10 - $1 = $9.

Suppose a Firm Receives $10 for Selling One Additional Unit