Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton isA. $350. B. $200. C. $550. D. $150.

The correct answer is letter "D": $150.

Explanation:

Producer Surplus is the difference between the price at which a producer sells a product and the minimum price a producer would have accepted for the product. The surplus comes from the producer being able to sell its products at a higher market price than its minimum price.

Thus, in the example:

Producer surplus = $350 - $200

Producer surplus = $150