Producer surplus is shown graphically as the area:
under the demand curve and above the market price.
under the demand curve and below the market price.
above the supply curve and below the market price.
above the supply curve and below the market price.
above the supply curve and above the market price.
which one is right?
1 answer
ps is the difference between the amount that producers actually receive and the minimum amount that they would have to receive in order to supply the given level of output. On a graph, ps can be shown as the area above the supply curve and below the prevailing market price.