Figure 7-16
-Refer to Figure 7-16.Producer surplus amounts to $300 if the price of the good is
A)$300.
B)$350.
C)$400.
D)$450.

Question

Figure 7-16 
-Refer to Figure 7-16.Producer surplus amounts to $300 if the price of the good is
A)$300. 
B)$350. 
C)$400. 
D)$450.

Quizplus · Accepted Answer

Producer surplus is the area above the supply curve and below the market price. In this graph, the producer surplus is the triangle above the supply curve and to the left of the equilibrium quantity, with base = 10 and height = $30 (=$350-320). Thus, the producer surplus amounts to (1/2) * 10 * $30 = $150. Adding this to the producer's profit of $150 (=320-170), the total producer surplus amounts to $300, which corresponds to choice (B).

Figure 7-16 -Refer to Figure 7-16.Producer Surplus Amounts to $300 If the $300