The marginal cost of producing an additional basket of tomatoes is $5.00.The consumer is willing to pay a maximum of $9.00 for an additional basket.A farmer sells a basket of tomatoes for $6.00 each.The farmer receives a producer surplus from selling an additional basket of tomatoes equal to
A)$1.00.
B)$3.00.
C)$4.00.
D)$5.00.
E)$9.00.

Question

Quizplus · Accepted Answer

The producer surplus is the difference between the price the farmer receives and the marginal cost of production. In this case, the farmer receives $6.00 for each basket of tomatoes, and the marginal cost of production is $5.00. Therefore, the producer surplus is $6.00 - $5.00 = $1.00.

The Marginal Cost of Producing an Additional Basket of Tomatoes