Question

The Kreidler Kids company can produce swing sets for $1,000. Kendra wants a new swing set for her children and will pay $1,500 for it. Kendra finds the swing set she wants and pays $1,500 for it from the Kreidler Kids company. The Kreidler Kids company has

Answer 1

Answer:

The Kreidler Kids company has a producer surplus of $500.

Explanation:

Producer surplus can be described or calculated as the amount a producer is willing to supply or sell goods and the actual amount the supplier received.

For this question, the producer surplus can therefore be calculated as follows:

The amount Kreidler Kids company can produce swing sets = $1,000

The amount paid by Kendra for the the swing set = $1,500

Producer surplus = The amount paid by Kendra for the the swing set - The amount Kreidler Kids company can produce swing sets = $1,500 - $1,000 = $500

Therfore, the Kreidler Kids company has a producer surplus of $500.