Producer Surplus is:
A)the difference between value and Supply for units traded.
B)the area below Supply for units traded.
C)the difference between price and Supply for units traded.
D)the area below price for units traded.

Question

Quizplus · Accepted Answer

Producer Surplus is the difference between the price paid by buyers and the lowest price that a seller would have been willing to sell the good. Therefore, it is the difference between price and Supply for units traded. Option A is incorrect as it refers to the concept of consumer surplus, which is the difference between value and price for units traded. Option B is incorrect as it refers to the total area between the supply curve and the quantity axis. Option D is incorrect as it refers to the total area between the price and the quantity axis.

Producer Surplus Is