Figure 4.5.2
-Figure 4.5.2 shows marginal costs for Betsy's Butter business. If Betsy sells the 1st unit of butter for $6, what is her producer surplus on that unit?
A) $4
B) $6
C) $9
D) $12
E) $7

Question

Figure 4.5.2 
-Figure 4.5.2 shows marginal costs for Betsy's Butter business. If Betsy sells the 1st unit of butter for $6, what is her producer surplus on that unit?
A) $4 
B) $6 
C) $9 
D) $12 
E) $7

Quizplus · Accepted Answer

Producer surplus is the amount that a producer benefits by selling a good at a price that is higher than their marginal cost. In this case, Betsy's marginal cost for the first unit of butter is $2. Therefore, if she sells it for $6, her producer surplus is $6 - $2 = $4.

Figure 4.5.2 -Figure 4.5.2 Shows Marginal Costs for Betsy's Butter Business. If