which of the following statements best captures the concept of producer surplus?
1) even though i was willing to pay up to 0 for a used laptop, i bought a used laptop for 0
2) i sold a used laptop for 0 on ebay last week. this week, someone offered me 0 for it.
3) i sold a used laptop 0, even though i was willing to go as low as 0 in order to sell it
4) even though i was willing to pay up to 0 for a used laptop, and even though the seller was willing to go as low as 0 in order to sell it, we couln’t reach a deal because the government has imposed a price ceiling of 0 on the sale of laptops.
what is the answer for it?
2 Comments
Producer surplus is the difference between the revenue sellers take in from sale of a good and the minimum amount they would accept to produce it. Producer surplus is the welfare sellers get from selling a good.
So, option 3 best captures this concept.
P.S. The producer surplus (PS) in this case would be the $300 they got for the laptop minus their reserve price for sale, $100, which equals $200. This is the welfare the seller got from selling the laptop.
1- you got it for less money because the "producer" or seller wanted to sell it.