The producer surplus on a unit of a good is
A) equal to the marginal benefit from the good minus its price.
B) equal to the price of the good minus the marginal cost of producing it.
C) always equal to consumer surplus.
D) Both answers A and C are correct.
E) Both answers B and C are correct.

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the price at which a good is sold and the marginal cost of producing it. Therefore, option B is the correct answer. Option A is incorrect because it is the definition of consumer surplus, not producer surplus. Option C is also incorrect because consumer surplus is not always equal to producer surplus. Option D is partially correct but only the first part is relevant to producer surplus. Option E is incorrect because only option B is correct.

The Producer Surplus on a Unit of a Good Is