The total cost of producing pizza is the amount received from selling it,

$100,000, minus the producer surplus, $40,000 (the area of the blue triangle), and is $60,000 (the red area beneath the MC curve). Producer surplus is the total amount received minus the total cost, or net benefit to producers.

(10, 000 × $8) ÷ 2 = $40, 000.

Figure 1 Checkpoint 6.3 Practice Problems Figure 1 shows the supply curve of DVDs and the market price of a DVD.

Distinguish between cost and price, and define producer surplus.

6.3

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