-Refer to the diagram above.At the profit-maximizing output,producer surplus is represented by the area
A) BCEK.
B) JCE.
C) JBKE.
D) OJEK.
E) OCEK.

Question

-Refer to the diagram above.At the profit-maximizing output,producer surplus is represented by the area
A) BCEK. 
B) JCE. 
C) JBKE. 
D) OJEK. 
E) OCEK.

Quizplus · Accepted Answer

Producer surplus is the difference between the price producers receive for their output and the minimum price they are willing to accept. At the profit-maximizing output, the price producers receive is equal to the marginal cost of production. The minimum price producers are willing to accept is equal to the average variable cost of production. Therefore, producer surplus is represented by the area above the marginal cost curve and below the average variable cost curve. In the diagram, this area is represented by OCEK.

-Refer to the Diagram Above