Table 7-15
The following table represents the costs of five possible sellers.
-Refer to Table 7-15. If each producer has one unit available for sale, and if the market equilibrium price is $80 per unit, how much is the total producer surplus in this market?
A)$90
B)$110
C)$130
D)$140

Question

Table 7-15
The following table represents the costs of five possible sellers. 
-Refer to Table 7-15. If each producer has one unit available for sale, and if the market equilibrium price is $80 per unit, how much is the total producer surplus in this market?
A)$90 
B)$110 
C)$130 
D)$140

Quizplus · Accepted Answer

To find the total producer surplus, we need to calculate the area between the supply curve and the equilibrium price line for each producer and add them up.

For producer A, the producer surplus is (1/2)(80-20)(1) = $30. 
For producer B, the producer surplus is (1/2)(80-30)(1) = $25. 
For producer C, the producer surplus is (1/2)(80-40)(1) = $20. 
For producer D, the producer surplus is (1/2)(80-60)(1) = $10. 
For producer E, the producer surplus is (1/2)(80-70)(1) = $5.

The total producer surplus is $30 + $25 + $20 + $10 + $5 = $90.

Therefore, the best choice is D, because it is the only option that matches the calculated total producer surplus.

Table 7-15 The Following Table Represents the Costs of Five Possible Sellers