Campbell needs to be paid at least $500 in order to sell their bicycle. They sell their bicycle and realize $125 in producer surplus. How much money was paid to Campbell for their bicycle?
The difference between the price a producer or seller obtains for a good or service and the lowest price they are willing to take in order to produce or deliver that good or service is known as producer surplus in economics. In other words, it refers to the financial gain or profit that manufacturers make when they sell a good for more than their production costs or the lowest price they will take.
In microeconomics, the producer surplus is frequently graphically represented on a supply and demand curve. It is the region between the market price and the supply curve, which shows the producer's readiness to supply at various prices. The producer makes more money from the market the higher the producer surplus.
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