Use the following to answer questions 44-45:
Figure 10.9
-(Figure 10.9) This firm is using block pricing, charging $35 each for the first 5 units, $25 each for units 6 and 7, and $15 for each unit beyond 7. What is the firm's producer surplus?
A) $80
B) $140
C) $100
D) $165

Question

Use the following to answer questions 44-45:
Figure 10.9 
-(Figure 10.9) This firm is using block pricing, charging $35 each for the first 5 units, $25 each for units 6 and 7, and $15 for each unit beyond 7. What is the firm's producer surplus?
A) $80 
B) $140 
C) $100 
D) $165

Quizplus · Accepted Answer

To calculate producer surplus, first find the market price, which is the highest price someone is willing to pay for the last unit (in this case, $15). Then, add up the total revenue (5 x $35 + 2 x $25 + 3 x $15 = $220). Finally, subtract the cost of producing those units (let's say it's $55). Therefore, the producer surplus is $165 ($220 - $55).

Use the Following to Answer Questions 44-45