A “spider-man” DVD is worth $25 to Marcus. But he buys one on sale for just...

A “spider-man” DVD is worth $25 to Marcus. But he buys one on sale for just $15. What is the producer surplus that results from Marcus’s purchase?

$40
$25
$15 (INCORRECT)
$10
Cannot be determined from the information given

Expert Solution

Since the consumer surplus is the area below the demand curve and above the price. In other words, the consumer surplus is the difference of maximum willingness to pay for any good and price of that good.

Since producer surplus is the area below the price and above the supply curve.

Total surplus=consumer surplus+ producer surplus.

Since Marcus maximum willingness to pay for a spider-man DVD is $25 and he buys on the sale it just for $15.

Hence consumer surplus will be=25-15

=$10

Since with the given information only consumer surplus can be calculated and not producer surplus.

Hence it can be said that from Marcus’s purchase producer surplus cannot be determined from the given information.

Hence option e is the correct answer.

Rahul Sunny answered 2 years ago

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