The Producer Surplus from a Good Is Equal to the

question 148

Multiple Choice

The producer surplus from a good is equal to the

• A) maximum amount a consumer is willing to pay for the good minus the price that actually must be paid summed over the quantity sold.
• B) actual price of the good minus the maximum amount a consumer is willing to pay for the good.
• C) opportunity cost of producing the good minus its price summed over the quantity sold.
• D) price of the good minus its opportunity cost of production summed over the quantity sold.

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Definitions:

Earnings Before Taxes

The income a company generates before taking into account the income tax expense.

Sales Price

The amount a buyer pays to purchase a product or service.

Net Present Value

The current value of an investment's projected earnings, discounted at an appropriate interest rate, minus the initial capital cost.

Required Rate

The lowest return an investor is willing to accept on an investment to deem it as profitable.