Producer Surplus as Revenue Minus Costs

Steps:

• Total revenue from selling Q units at price P is P × Q.
• Area under supply curve up to Q equals total variable cost C.
• Producer surplus is total revenue minus total variable cost.
• Thus, surplus = (P × Q) - C.

Why C is correct:

• Producer surplus formula: total revenue (P × Q) minus area under supply curve (total variable costs C), per economic definition.

Why the others are wrong:

• A: Subtracts total cost from price, ignoring quantity multiplier.
• B: Equals total revenue only, omitting cost subtraction.
• D: Treats C as per-unit cost, incorrectly scaling subtraction by Q.

Final answer: C