Learning Path
Question & Answer
Choose the Best Answer
The difference between what producers are willing to accept for a good and the actual price they receive
The excess of demand over supply at a given price level
The total revenue earned by producers from selling their goods
The additional cost incurred by producers when increasing production
Understanding the Answer
Let's break down why this is correct
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
Demand and Supply Basics
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Deep Dive: Demand and Supply Basics
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Definition
Demand and supply basics cover the fundamental concepts related to the quantities of a product that consumers are willing and able to purchase (demand) and the quantities that suppliers are willing to offer (supply) at different price levels. The law of demand and supply explains the inverse relationship between price and quantity demanded or supplied, leading to the formation of demand and supply curves.
Topic Definition
Demand and supply basics cover the fundamental concepts related to the quantities of a product that consumers are willing and able to purchase (demand) and the quantities that suppliers are willing to offer (supply) at different price levels. The law of demand and supply explains the inverse relationship between price and quantity demanded or supplied, leading to the formation of demand and supply curves.
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