Study the supply curve given below and answer the following question.

If the market price is $4, the producer surplus is ________.

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$12

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$16

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$32

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Solution

The correct option is C
$16

Producer surplus, $Π$ is the area above the supply curve and below the price.

$Π = \frac{1}{2} \times 8 \times 4 = $ 16$

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