Final answer:
Producer surplus is the benefit producers receive for selling a product above their minimum acceptable price. It is the area above the supply curve and below the market price up to the quantity produced. Changes in producer surplus occur with the imposition of price ceilings and floors.
Step-by-step explanation:
The concept of producer surplus is a measure of the additional benefit that producers receive when they are able to sell a product at a price higher than the minimum they would have accepted. To calculate the producer surplus, one has to look at the area above the supply curve and below the market price up to the quantity produced. In the scenario described by Figure 3.23, producers would have been willing to supply a product at a price of $45, but the market equilibrium price is $80. The producer surplus is represented by the area labeled G, which is the region between the equilibrium price and the segment of the supply curve below it.
For example, Figure 3.24 (a) and (b) depicts changes in producer surplus due to the imposition of governmental price controls such as price ceilings and price floors. Following a price ceiling, the producer surplus is reduced to area X, and following a price floor, it increases to areas H + I, as the new quantity supplied changes with these new imposed price levels.