Answer to Question #220503 in Microeconomics for Keshav

Question

Debanjana is selling her viola . The minimum amount she needs to be paid for the viola is $15,500.she finds a buyer who is willing to pay $22,400, but this buyer insists that debanjana pays for delivery the viola. The cost of delivery is $700.debanjana producer producer surplus from selling his visa is equal to ,

Answer 1

Producer surplus$=$ Total revenue$-$ Total cost

Total revenue$=$ $ 22$,$ 400

Total cost$=$ $15$,$ 000+ $700

So $22$,$ 400$-$ $15$,$ 700

Surplus $=$ $ 6$,$ 700