Table 53 -Refer to Table 5

Multiple Choice

Table 5.3
$$\begin{array} { | l | c | } \hline{ \begin{array} { c } \text { The Waco Kid's } \\\text { Cowboy Hats }\end{array} } & \begin{array} { c } \text { Marginal Cost } \\\text { (dollars) }\end{array} \\\hline \text { 1st hat } & 24 \\\hline \text { 2nd hat } & 30 \\\hline \text { 3rd hat } & 38 \\\hline \text { 4th hat } & 46 \\\hline\end{array}$$
-Refer to Table 5.3.The table above lists the marginal cost of cowboy hats by The Waco Kid,a firm that specialises in producing fancy dress costumes.If the market price of The Waco Kid's cowboy hats is $40,__________.

A) The Waco Kid will produce four hats
B) producer surplus from the first hat is $40
C) producer surplus will equal $28
D) there will be a surplus; as a result, the price will fall to $24