Producer surplus for a particular unit of a good is the: -difference between the

Question

Producer surplus for a particular unit of a good is the: -difference between the market price and the sellers cost of producing that unit -sum of the market price and the sellers cost of producing that unit -ratio of the market price to the sellers cost producing that unit -ratio of the market price to the sellers cost of producing that unit multiplied by 100 -product of the market price and the sellers cost of producing that unit Producer surplus for a particular unit of a good is the: -difference between the market price and the sellers cost of producing that unit -sum of the market price and the sellers cost of producing that unit -ratio of the market price to the sellers cost producing that unit -ratio of the market price to the sellers cost of producing that unit multiplied by 100 -product of the market price and the sellers cost of producing that unit -difference between the market price and the sellers cost of producing that unit -sum of the market price and the sellers cost of producing that unit -ratio of the market price to the sellers cost producing that unit -ratio of the market price to the sellers cost of producing that unit multiplied by 100 -product of the market price and the sellers cost of producing that unit

Explanation / Answer

We know Producer Surplus is the difference between the price a producer actually gets or receives for a commodity and the minimum price the producer would have been willing to supply or sell the good. So it is a difference between a market price the producer is getting and the minimum price he would have sell the product.

So, here we can say Producer surplus for a particular unit of a good is the difference between the market price and the sellers cost of producing that unit. Because let suppose for 5th unit of a good which is a particular unit of good, for this 5th unit producer is receiving 10 dollar and the cost of producing the 10th unit is let suppose is 5 dolaar. Then producer surplus is 10 - 5 = 5 dollar.

Now if we say total producer surplus of producing 10 units (not 10th unit) of good then it becomes sum of market prices i.e 10*10 =100 minus cost of producing 10 units i.e 10*5 =50 . In this case producer surplus becomes 100 - 50 =50 dollars

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