Producer surplus is best measured as the difference between the price a seller receives and the seller's:
Correct answer: A. Minimum price the seller is willing to accept
- A. Minimum price the seller is willing to accept
- B. Maximum price the buyer is willing to pay
- C. Average total cost at the market output
- D. Marginal revenue from the final unit sold
Explanation
Producer surplus is the area or gain received above the minimum price at which producers are willing to supply a product. The maximum price a buyer will pay is used in defining consumer surplus, not producer surplus.
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About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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