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If producers are willing to sell 20 cans of soda at a total price of $10 and a local restaurant offers to pay $16, then producer surplus is equal to __________

Sagot :

If producers are willing to sell 20 cans of soda at a total price of $10 and a local restaurant offers to pay $16, then producer surplus is equal to $6.

Total price=$10

Offers to pay=$16

Surplus=10-16=$6

Producer surplus is the difference between the price a person would accept for a certain quantity of a good and the price they could get for the good if they sold it at market value.

The producer benefits from market sales of the good by receiving the difference or surplus amount.

Market pricing above the lowest price producers would normally be ready to pay for their goods result in a producer surplus. The Walras law may be relevant here.

To learn more about Surplus here

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