Producer surplus is:
A) the difference between the price of a product and marginal cost of producing the product.
B) the difference between the price of a product and what consumers were willing to pay for the product.
C) the difference between the discounted price of a product and its retail price.
D) the difference between the price of a product and its average cost of production.

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the market price of a good and the marginal cost of production. This means that it is the amount of profit that producers are able to make above and beyond their costs of production. Option A describes this concept accurately. Option B describes consumer surplus, which is the difference between the price that consumers are willing to pay for a good and the actual market price. Options C and D are unrelated to the concept of producer surplus.

Producer Surplus Is