Question

Seller	Production cost per unit
Floyd	$80
Gloria	$70
Harold	$60
Irene	$55

The table in Exhibit 3 refers to the production costs, per unit, of
a particular good for four possible sellers. Assume that there are
only four sellers in the market. Which of the following statements
is (are) correct?
(x) If the market price is $70, then producer surplus in the market
is more than $20 but less than $30.
(y) If the price is $65, Floyd and Gloria will produce and sell the
good, but Harold and Irene will not.
(z) When the price is $85 in this market, each of these four sellers
would have a positive value for producer surplus if they
participated in the market.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (z) only

Answer 1

"C"

Option X and Z are correct, as the producer selling at the price above the minimum price will be making a producer surplus , at price of $70 the producer surplus will be $25 and at price of $85 all the producers will be making a surplus.