Suppose Alice sells a good for $60 on eBay. If the producer surplus from the sale is $25, Alice's cost of the good must have been:
A) $35.
B) $25.
C) $60.
D) $85.

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the price at which a producer is willing to sell a good and the actual price they receive. In this case, the producer surplus is $25, meaning that Alice was willing to sell the good for $60, but actually received $85 ($60 + $25). Therefore, Alice's cost of the good must have been $35 ($60 - $25).

Suppose Alice Sells a Good for $60 on EBay