The table below shows the marginal costs of the last croissant produced by four different bakeries.
\begin{tabular}{ll}
Bakery & Marginal cost \
\hline A & $\$ 2.25$ \
B & $\$ 2.75$ \
C & $\$ 3.00$ \
D & $\$ 3.25$
\end{tabular}

Which of the bakeries represented above are experiencing producer surplus at a price of $\$ 3$ per croissant?

Choose 1 answer:
(A) $A$ and $B$
(B) $A, B$, and $C$
(C) $\mathrm{A}, \mathrm{B}, \mathrm{C}$ and $\mathrm{D}$
(D) A and D

Question

The table below shows the marginal costs of the last croissant produced by four different bakeries.
\begin{tabular}{ll} 
Bakery & Marginal cost \
\hline A & $\$ 2.25$ \
B & $\$ 2.75$ \
C & $\$ 3.00$ \
D & $\$ 3.25$
\end{tabular}

Which of the bakeries represented above are experiencing producer surplus at a price of $\$ 3$ per croissant?

Choose 1 answer:
(A) $A$ and $B$
(B) $A, B$, and $C$
(C) $\mathrm{A}, \mathrm{B}, \mathrm{C}$ and $\mathrm{D}$
(D) A and D

Accepted Answer

∻Solution∻ ‖ a ⋮ Producer Surplus Concept: Producer surplus is the difference between what producers are willing to accept for a good or service versus what they actually receive. ‖ ‖ b ⋮ Identifying Producer Surplus: If the price received for a good is higher than the marginal cost of production, the producer experiences a surplus. ‖ ‖ c ⋮ Analysis of Bakeries: At a price of $3 per croissant, bakeries with marginal costs below this price are experiencing producer surplus. ‖ ‖ d ⋮ Determining Surplus for Each Bakery: - Bakery A has a marginal cost of $2.25, which is less than $3, so it has a producer surplus. - Bakery B has a marginal cost of $2.75, which is also less than $3, so it has a producer surplus. - Bakery C has a marginal cost of $3.00, which is equal to the price, so it does not have a producer surplus. - Bakery D has a marginal cost of $3.25, which is more than $3, so it does not have a producer surplus. ‖ ∻Answer∻ ⚹ A and B ⚹ ∻Key Concept∻ ⚹ Producer Surplus ⚹ ∻Explanation∻ ⚹ Producer surplus occurs when the price received by producers is higher than the marginal cost of production. Only bakeries A and B have marginal costs below the price of $3 and are thus experiencing producer surplus. ⚹◊What is the formula to calculate producer surplus in microeconomics?⍭ Generate me a similar question◊$

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