Producer surplus is the difference between:

• A. total revenue and total cost
• B. the market price and the equilibrium price
• C. the price a buyer pays and the price a seller receives
• D. the price a seller receives and the minimum price they are willing to accept

Answer: (D)

Verified step by step guidance

1. Understand the concept of producer surplus: it measures the benefit producers receive when they sell a product at a market price higher than the minimum price they are willing to accept.
2. Identify the minimum price a seller is willing to accept, which is typically the seller's cost or reservation price for producing the good.
3. Recognize that the price a seller actually receives is the market price at which the good is sold.
4. Express producer surplus mathematically as the difference between the market price (\(P\)) and the minimum acceptable price (\(P_{min}\)): \[\text{Producer Surplus} = P - P_{min}\]
5. Note that total producer surplus is the sum of these differences across all units sold, often represented graphically as the area above the supply curve and below the market price.