The minimum price at which a seller was willing to sell an old television set was Rs 37,000. The seller quoted Rs 50,000, but finally the TV was sold for Rs 42,000. This transaction generated which amount of producer surplus for the seller?

Introduction / Context:
This question focuses on the concept of producer surplus, which is a measure of the benefit a seller receives when the selling price exceeds the minimum price at which the seller was willing to supply the good. Producer surplus is widely used in welfare economics to measure how much better off producers are because of market prices. Understanding how to compute it from simple price information is important in microeconomics.

Given Data / Assumptions:

• Minimum acceptable price (seller's reservation price) = Rs 37,000.
• Quoted price = Rs 50,000, but this is just an asking price, not the actual transaction price.
• Actual selling price (market transaction price) = Rs 42,000.
• Producer surplus is calculated as actual price received minus the minimum price the seller was willing to accept.

Concept / Approach:
Producer surplus is defined as the difference between the amount a producer actually receives for a unit of output and the minimum amount that the producer would have been willing to accept to supply that unit. It does not depend on any higher quoted or advertised price if the transaction occurs at a lower negotiated price. In this case, producer surplus equals selling price minus minimum acceptable price. We also distinguish this from consumer surplus, which is the difference between a buyer's willingness to pay and the actual price paid.

Step-by-Step Solution:
Step 1: Identify the minimum acceptable price for the seller. Minimum acceptable price = Rs 37,000. Step 2: Identify the actual selling price. Selling price = Rs 42,000. Step 3: Recall the formula for producer surplus. Producer surplus = Actual price received − Minimum acceptable price. Step 4: Substitute the values. Producer surplus = 42,000 − 37,000 = Rs 5,000. Step 5: Match this calculation with the options, making sure to pick the option that explicitly states producer surplus, not consumer surplus.

Verification / Alternative check:
To verify, we can think in graphical terms: the minimum acceptable price is like a supply curve point at Rs 37,000, while the market price is Rs 42,000. The producer surplus is the vertical distance between these two price levels for one unit. Numerically it is exactly Rs 5,000. The quoted price of Rs 50,000 does not matter because no transaction took place at that price. Only the final transaction price and the reservation price determine the surplus.

Why Other Options Are Wrong:
Option A (Rs 5,000 worth of consumer surplus) mislabels the type of surplus; the buyer's willingness to pay is not given, so we cannot compute consumer surplus here. Option B (Rs 8,000 worth of consumer surplus) is also incorrect for the same reason and has the wrong amount. Option D (Rs 8,000 worth of producer surplus) would correspond to a sale price of Rs 45,000 if the minimum acceptable were Rs 37,000, which is not the case here. Therefore, the only correct option is C, which correctly states Rs 5,000 worth of producer surplus.

Common Pitfalls:
Students may mistakenly use the quoted or advertised price instead of the actual transaction price, which leads to wrong surplus values. Another common error is mixing up consumer surplus and producer surplus, perhaps because both concepts involve differences between willingness to pay or accept and the actual price. To avoid this, always ask whose benefit is being measured, the buyer or the seller, and focus on the relevant prices for that side of the market.

Final Answer:
The sale of the television generated Rs 5000 worth of producer surplus for the seller.