The price of a cowboy hat is $100.Willie can produce a hat at a marginal cost of $130,Waylon can produce at a marginal cost of $100,and Merle can produce at a marginal cost of $85.Which of the following statements is correct?
A) The sum of producer surplus is $15.
B) All three of these sellers will gain producer surplus from selling a hat.
C) The sum of producer surplus is $30.
D) Willie's producer surplus is $30.
E) The sum of producer surplus is $45.

Question

Quizplus · Accepted Answer

Merle will sell the hat with a producer surplus of $15 ($100 - $85), Waylon will sell with a producer surplus of $0 ($100 - $100), and Willie will not sell because his marginal cost is higher than the price. Thus, the sum of producer surplus is $15.

The Price of a Cowboy Hat Is $100