Producer surplus is equal to

a) the firm's profit when fixed costs exist. b) the difference between price and marginal cost for all units sold. c) the difference between price and average cost for all units sold. d) the area under the supply curve.

Question

Business

Alexa Cunningham

2 January, 15:42

Producer surplus is equal to

a) the firm's profit when fixed costs exist. b) the difference between price and marginal cost for all units sold. c) the difference between price and average cost for all units sold. d) the area under the supply curve.

+2

Answers (1)

Know the Answer?

Keith Reid · Answer 1

The correct answer is option b.

Explanation:

Producer surplus refers to the difference between the price a producer would be willing to receive for his product and the price he actually gets.

The difference between total revenue and the total cost is the producer surplus. We can also say that it is the difference between the price per unit and marginal cost. It is the area between the supply curve and the equilibrium price.

Producer surplus is equal toa) the firm's profit when fixed costs exist. b) the difference between price and marginal cost for all units sold. c) the difference between price and average cost for all units sold. d) the area under the supply curve.

Producer surplus is equal to

a) the firm's profit when fixed costs exist. b) the difference between price and marginal cost for all units sold. c) the difference between price and average cost for all units sold. d) the area under the supply curve.