Refer to Table 7-7. If the market price is \$1,000, what is the total producer surplus in the market?

• A. \$2,000
• B. \$500
• C. \$1,000
• D. \$1,500

Answer: (C)

Verified step by step guidance

1. Identify the quantity supplied at the market price of \$1,000 by looking at the supply schedule or table. This tells you how many units producers are willing to sell at that price.
2. For each unit supplied, determine the producer's minimum acceptable price (usually the marginal cost or the supply price for that unit) from the table.
3. Calculate the producer surplus for each unit by subtracting the minimum acceptable price from the market price: \(\text{Producer Surplus per unit} = \text{Market Price} - \text{Minimum Acceptable Price}\).
4. Sum the producer surplus for all units supplied at the market price to find the total producer surplus: \(\text{Total Producer Surplus} = \sum (\text{Market Price} - \text{Minimum Acceptable Price for each unit})\).
5. Verify your total producer surplus by comparing it to the options given and ensure it matches the correct answer provided.