A consumer values a car at $30,000 and it cost a producer $20,000 to make the same car. If the transaction is complete at $24,000,the transaction will generate.
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$6,000 worth of buyer surplus and $4,000 of seller surplus.
To determine the gain or surplus from the transaction, we need to calculate the difference between the amount the consumer values the car and the cost to produce it.
The consumer values the car at $30,000, which is their willingness to pay for it.
The cost to produce the same car is $20,000, which is the producer's opportunity cost or cost of production.
Therefore, the gain or surplus for the producer would be the selling price minus the production cost:
Surplus = Selling price - Production cost
Surplus = $24,000 - $20,000
Surplus = $4,000
Therefore, the transaction will generate a surplus of $4,000 for the producer.