The supply function of a commodity is P = . When 4 units of commodity are sold , then producer surplus is:
The supply function of a commodity is P = . When 4 units of commodity are sold , then producer surplus is:
Solution
✅ Correct Option: 4
Given supply function:
When :
This is the market price at which 4 units are sold.
Total Revenue
This is the total money producers receive from selling 4 units.
Area under supply curve represents the minimum amount producers would have accepted:
Producer Surplus Total Revenue Area under supply curve
Producer surplus is the extra benefit producers get - they were willing to accept but received .
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