Stefano has just completed an original oil painting. After considering the costs for brushes, paint, canvas, and the value of Stefano's labor time, the marginal cost of the painting is $1,000. Lucky Stefano. One art lover paid him $1,500. How much producer surplus did Stefano obtain?
A) The amount of producer surplus cannot be determined from the information given.
B) $1,500
C) $1,000
D) $500

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the price received and the marginal cost. Stefano received $1,500 and the marginal cost was $1,000, so the producer surplus is $500.

Stefano Has Just Completed an Original Oil Painting