The difference between the lowest price a firm would have been willing to accept and the price it actually receives is called what?

The distinction between the lowest price at which a firm is willing to sell its product and the actual price it receives defines producer surplus. Producer surplus reflects the economic benefit that producers gain when they sell a good at a higher price than the minimum they would have accepted. This concept plays a critical role in evaluating overall economic welfare in a market, as it highlights the profitability and incentive for producers to supply goods in response to market prices.

In contrast, consumer surplus pertains to the difference between the highest price consumers are willing to pay for a good and the market price they actually pay, which is not relevant to the question at hand. Market equilibrium refers to the state where supply equals demand, and total revenue is the total income a firm generates from sales, calculated by multiplying price by quantity sold. Understanding these terms helps clarify why producer surplus is the key focus of the question.