(Figure 10.4) If the firm cannot practice third-degree price discrimination and must charge a single profit-maximizing price, it will earn producer surplus of approximately:
A) $3,521.05.
B) $2,990.
C) $980.
D) $4,555.20.

Question

Quizplus · Accepted Answer

The correct answer is A because the profit-maximizing price is $10.50, and the quantity sold at that price is 400 units. The total revenue is therefore $4,200, and the total cost is $678.95. The producer surplus is therefore $4,200 - $678.95 = $3,521.05.