ECONOMICS
CONSUMERS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Gordon lists his old Lionel electric trains on eBay and sets a minimum acceptable price at $75. He received three bids after five days on eBay:$25, $50, and $75. He accepts the latter. His producer surplus is:
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$0
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$25
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$50
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$75
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Explanation:
Detailed explanation-1: -Answer and Explanation: The given statement is TRUE.
Detailed explanation-2: -Producer surplus = Market price – Producer’s Minimum Acceptable Price. Alternatively, it is also calculated as follows: Producer surplus = Total Revenue – Production Cost.
Detailed explanation-3: -Answer and Explanation: The correct option is c. As the price of a good or service rises, the quantity supplied will increase.
Detailed explanation-4: -The easiest way to calculate total economic surplus is to subtract total benefits from total costs. It is equivalent to subtracting marginal benefits from marginal costs. The economic surplus graph depicts a triangle based on the y-axis, reaching equilibrium of supply and demand.
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