were willing to accept for their products. For example, point K on the supply curve shows that at a price of $45, firms

would have been willing to supply a quantity of 14 million.

The supply curve shows the quantity that firms are willing to supply at each price. For example, point K in

Figure 3.23 illustrates that, at $45, firms would still have been willing to supply a quantity of 14 million. Those

producers who would have been willing to supply the tablets at $45, but who were instead able to charge the

equilibrium price of $80, clearly received an extra benefit beyond what they required to supply the product.

The extra benefit producers receive from selling a good or service, measured by the price the producer actually

received minus the price the producer would have been willing to accept is called producer surplus. In Figure

3.23, producer surplus is the area labeled G—that is, the area between the market price and the segment of the

supply curve below the equilibrium.
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