Caroline sharpens knives in her spare time for extra income. Buyers of her service are willing to pay $2.95 per knife for as many knives as Caroline is willing to sharpen. On a particular day, she is willing to sharpen the first knife for $2.00, the second knife for $2.25, the third knife for $2.75, and the fourth knife for $3.50. Assume Caroline is rational in deciding how many knives to sharpen. Her producer surplus is:.
a. $1.85.
b. $0.95.
c. $1.15.
d. $1.30.

A. $1.85

Explanation:

Producer surplus is the difference between how much an individual is willing to sell a good and how much they sell it at prevailing market prices.

Given that

Buyers are willing to pay = $2.95

Willing to sharpen 1st knife = $2.00

2nd knife = $2.25

3rd knife = $2.75

4th knife = $ 3.50

Therefore

Producer surplus = (2.95 - 2.00) + (2.95 - 2.25) + (2.95 - 2.75)

= 0.95 + 0.7 + 0.2

= $1.85

Note, the 4th knife is not included because what she's willing to collect is greater than what the buyer is willing to offer. So transaction doesnt take place.

where is the graph?