Question

MJM Products, Inc., designs and sells flannel jackets. The company is willing to sell a men’s flannel jacket for as little as $45. Its main competitor is RL Outriggers, which is willing to sell the same men’s flannel jacket for as little as $40. The current market price of that type of jacket is $57. What is the total producer surplus for the two firms?

Answer 1

Total Producer surplus = 29

Step-by-step explanation:

given data

sell jacket = $45

sell jacket = $40

current market price = $57

to find out

total producer surplus for the two firms

solution

we know producer surplus is the difference between the price of a good the producer is willing to accept for a product versus actual market price

so

Total Producer surplus = ( $57 - $45 ) + ( $57 - $40)

Total Producer surplus = 12+17

Total Producer surplus = 29