Asked by Dorothy Dietrich on May 02, 2024
Verified
The difference between current market price and full costs of production for the firm is known as
A) consumer surplus.
B) producer surplus.
C) market surplus.
D) nonprice surplus.
Producer Surplus
The difference between what producers are willing to accept for a good or service versus what they actually receive, representing a measure of producer welfare.
Market Price
The ongoing price point for transactions involving assets or services in the open market.
Costs Of Production
Expenses incurred during the process of creating a product or service, including raw materials, labor, and overhead costs.
- Understand the correlation between market price, production costs, and the surplus of the producer.
Verified Answer
VV
Vanessa VarlackMay 02, 2024
Final Answer :
B
Explanation :
Producer surplus is the difference between the current market price and the full costs of production for the firm. It represents the additional benefit the producer receives for selling a product at a higher price than the minimum they would be willing to accept.
Learning Objectives
- Understand the correlation between market price, production costs, and the surplus of the producer.