A Producer's Minimum Acceptable Price for a Particular Unit of a Good

question 155

Multiple Choice

A producer's minimum acceptable price for a particular unit of a good

• A)is the same for all units of the good.
• B)will, for most units produced, equal the maximum that consumers are willing to pay for the good.
• C)equals the marginal cost of producing that particular unit.
• D)must cover the wages, rent, and interest payments necessary to produce the good but need not include profit.

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Definitions:

Consumer Surplus

The discrepancy between what consumers are ready and capable of spending for a good or service, as shown by the demand curve, and the actual amount paid by them, known as the market price.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, due to market prices.

Total Surplus

The aggregate benefit to society, constituted by the addition of consumer and producer surplus, derived from the creation and utilization of goods and services.

Total Surplus

The aggregate of producer surplus and consumer surplus, symbolizing the complete net advantage to society through the consumption and manufacture of goods and services.