The producer surplus of making and selling 10 chairs is found by
A) multiplying the selling price by 10.
B) subtracting the marginal cost from the selling price for each chair and summing the differences for all 10 chairs.
C) subtracting from the total revenue the cost of producing one chair multiplied by 10.
D) adding the marginal cost and the price of all 10 chairs.
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the selling price and the marginal cost of producing each unit. Therefore, to find the producer surplus of making and selling 10 chairs, we need to calculate the difference between the selling price and marginal cost for each chair and then sum these differences for all 10 chairs. Option B is the only choice that accurately describes this method of calculation.

The Producer Surplus of Making and Selling 10 Chairs Is