Question

Seller Cost

LeBron $700
Kobe $600
Kevin $450
Steve $400

You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. You hire Kevin for a price of $500. What is his producer surplus?

Answer 1

Kevin's producer surplus is $50.

Step-by-step explanation:

In this scenario, the producer surplus refers to the extra benefit that Kevin, the photographer hired for $500, receives beyond his actual cost of $450 to provide his services. To calculate Kevin's producer surplus, we need to find the difference between the price he receives and his actual cost.

His producer surplus would be:

Surplus = Price received - Actual cost = $500 - $450 = $50

Therefore, Kevin's producer surplus is $50.