Table 7-14
The only four producers in a market have the following costs:

-Refer to Table 7-14. If Abbey, Bev, and Carl sell the good, and the resulting producer surplus is $55 altogether, then the price must have been
A) $40.
B) $50.
C) $60.
D) $70.

Question

Table 7-14
The only four producers in a market have the following costs:
 
-Refer to Table 7-14. If Abbey, Bev, and Carl sell the good, and the resulting producer surplus is $55 altogether, then the price must have been
A) $40. 
B) $50. 
C) $60. 
D) $70.

Quizplus · Accepted Answer

To find the price, we need to first find the total cost of producing the goods by Abbey, Bev, and Carl. 
Total cost = Abbey's cost + Bev's cost + Carl's cost 
Total cost = (10 + 20 + 30) = $60

We know that the total producer surplus is $55. This means that the revenue earned by the producers (price * quantity) is $55 more than their total cost.

Therefore, price * quantity - total cost = $55 
We don't know the quantity, but we can find the minimum possible price that would make this equation true.

Let's assume that the quantity is 1 (i.e. each producer sells one unit of the good). 
Price * 3 - $60 = $55 
Price = ($60 + $55)/3 = $38.33

This price is lower than Abbey's cost, so it's not possible. But if the price is $60, then 
Price * 3 - $60 = $55 
Price = $25/3 = $8.33 per unit

This price is higher than their individual costs, but lower than their total cost, making it possible to have a surplus of $55 altogether. Thus, the answer is C) $60.

Table 7-14 The Only Four Producers in a Market Have the Following