Use the figure below to answer the following questions. Figure 5.2.5a Figure 5.2.5b
-Refer to Figure 5.2.5.If the price of a pizza is $30,what is the producer surplus in the market if Pizza House and Pizza Club are the only firms?
A)$625
B)$500
C)$25
D)$2,250
E)$1,125

Question

Use the figure below to answer the following questions.   Figure 5.2.5a Figure 5.2.5b
-Refer to Figure 5.2.5.If the price of a pizza is $30,what is the producer surplus in the market if Pizza House and Pizza Club are the only firms?
A)$625 
B)$500 
C)$25 
D)$2,250 
E)$1,125

Quizplus · Accepted Answer

Producer surplus can be calculated by finding the area above the supply curve and below the actual price. In this case, the supply curve is the marginal cost curve and the actual price is $30. The point where the marginal cost curve intersects the y-axis (quantity axis) is at Q = 50. So the producer surplus is:

Producer surplus = (1/2)*($30-$10)*50 = $625

Therefore, choice A is correct.

Use the Figure Below to Answer the Following Questions