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Graphically, producer surplus is measured as the area rev: 05_10_2018 Multiple Choice
A) above the supply curve and below the actual price.
B) above the supply curve and above the actual price.
C) under the demand curve and below the actual price.
D) under the demand curve and above the actual price.

Respuesta :

Answer:

The correct answer is option A.

Explanation:

Producer surplus can be defined as the difference between the price that the sellers are willing to accept and the actual price the get for the product.  

Graphically representing, it is the area above the supply curve and below the actual price. This area indicates the total benefit that the producer is earning by supplying the product at actual price.  

Producer surplus acts as a measure of producer welfare and is equal to the difference between total revenue earned and the total cost incurred in the production process.

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