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?
The correct answer is above the supply curve and below the market price.
To understand producer surplus graphically, you need to consider the supply and demand curves in a market. The supply curve shows the quantity of a good or service that producers are willing and able to sell at different prices, while the demand curve shows the quantity of the same good or service that consumers are willing and able to purchase at different prices.
Producer surplus represents the benefit that producers receive from selling their goods or services at a price higher than the minimum price they are willing to accept. It is calculated as the difference between the market price and the minimum price that producers are willing to accept.
Graphically, producer surplus is shown as the area above the supply curve and below the market price. It represents the extra revenue that producers earn from selling their goods at a price higher than their cost of production. The larger the producer surplus, the greater the benefit to producers.
Therefore, in the given options, the correct answer is "above the supply curve and below the market price."
The correct answer is:
above the supply curve and below the market price.