Farmer Jones knows that the marginal cost to produce a bushel of tomatoes is $3 per bushel. He also knows that a consumer is willing to pay a maximum of $10 for the bushel. The price of the bushel is $7 and Farmer Jones sells his bushel for $7. On this bushel, Farmer Jones earns a producer surplus equal to $ .

The business cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (gdp) and other macroeconomic variables. a business cycle is typically characterized by four phases—recession, recovery, growth, and decline—that repeat themselves over time. economists note, however, that complete business cycles vary in length. the duration of business cycles can be anywhere from about two to twelve years, with most cycles averaging six years in length. some business analysts use the business cycle model and terminology to study and explain fluctuations in business inventory and other individual elements of corporate operations. but the term "business cycle" is still primarily associated with larger (industry-wide, regional, national, or even international) business trends.