Producer surplus is calculated: Question 15 options: By taking the consumers' willingness to pay for a good or service minus the price they actually pay. By taking the price consumers actually pay for the good or service minus the seller's willingness to sell a good or service (i.e. seller's cost). By taking the price consumers actually pay for a good or service minus their willingness to pay for the good or service. By taking the seller's willingness to sell a good or service (i.e. seller's cost) minus the price consumers actually pay for the good or service.

The difference between the consumer's actual price for the good and the utmost price they would be prepared to pay is known as the consumer surplus. It is shown as the area below the demand curve and above the equilibrium price on the graph. The entire surplus in the market is the sum of the production surplus and consumer surplus. The region between the supply and demand curves is how they are collectively depicted.The market price for that good and the minimum price a producer is willing to accept for a good are subtracted to find the producer surplus. A surplus displays the gains made by producers from the sale of their products. It can also be described as the area between the price and supply curve. Hence, producer surplus is market price received by the produced subtracted by the minimum price. The correct answer is option B.A. This option is incorrect because this formula gives the consumer surplus. C. This option is incorrect because producer surplus does not take into account the willingness of consumers to pay for the good. D. This option is incorrect because producer surplus is calculated by subtractinv the price actually paid from the seller's cost.

Answered: Producer surplus is calculated:…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Producer surplus is calculated:

Question 15 options:

	By taking the consumers' willingness to pay for a good or service minus the price they actually pay.
	By taking the price consumers actually pay for the good or service minus the seller's willingness to sell a good or service (i.e. seller's cost).
	By taking the price consumers actually pay for a good or service minus their willingness to pay for the good or service.
	By taking the seller's willingness to sell a good or service (i.e. seller's cost) minus the price consumers actually pay for the good or service.

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