Producer Surplus Is

question 315

Multiple Choice

Producer surplus is

• A) the difference between how much a consumer would be willing to pay to consume a good and the amount actually paid to purchase the good.
• B) the difference between the actual price of a good and the amount a producer is willing to accept given its costs.
• C) equal to accounting profit.
• D) equal to economic profit.

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Definitions:

Price Elasticity

An economic concept that measures how the quantity demanded of a good changes in response to a change in its price.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good.

Elastic

A term often used in economics to describe a situation where the demand for a product or service significantly changes in response to a change in price.

Pricing Strategy

An approach businesses use to set the prices for their products or services, based on costs, market demand, competition, and other factors.