If Mike sells a shirt for $40, and his producer surplus from the sale is $12, his cost must be: A

Economics Dec 06, 2020

If Mike sells a shirt for $40, and his producer surplus from the sale is $12, his cost must be:

A. $28 B. $32 C. $40 D. $52

Expert Solution

As we know, a producer surplus is the difference between the price at which producer is willing to sell the commodity and the actual price received by the seller, therefore, in this case, Mike's cost must be equal to $40 -$12 which is equal to $32. So, the right answer is option B.

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