Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The difference between what producers are willing to accept for a good and the actual price they receive
B
The excess of demand over supply at a given price level
C
The total revenue earned by producers from selling their goods
D
The additional cost incurred by producers when increasing production
Understanding the Answer
Let's break down why this is correct
Answer
Producer surplus is the extra money a seller keeps when they sell a product for more than the lowest price they would accept. In a supply‑demand diagram, it appears as the area between the supply curve and the market price, above the supply curve and below the price line. It shows how much profit producers make over the minimum they would be willing to sell for. For example, if a farmer can sell a tomato for $4 but would accept at least $2, the $2 difference is producer surplus. This surplus represents the benefit producers receive from the market price being higher than their cost.
Detailed Explanation
Producer surplus is the extra money producers get when the market price is higher than the lowest price they would accept. Other options are incorrect because Option B mixes up demand and supply; Option C confuses surplus with revenue.
Key Concepts
producer surplus
Topic
Demand and Supply Basics
Difficulty
easy level question
Cognitive Level
understand
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