Asked by Laisha Molina Garcia on Apr 30, 2024
Verified
In the long run, a firm's producer surplus is equal to the:
A) economic rent it enjoys from its scarce inputs.
B) revenue it earns in the long run.
C) positive economic profit it earns in the long run.
D) difference between total revenue and total variable costs.
E) difference between total revenue and total fixed costs.
Producer Surplus
The difference between the amount that producers are willing and able to sell a good for and the actual amount they receive in the market.
Economic Rent
Income derived from the possession of a unique resource, exceeding that which is needed to keep the resource in its current employment.
Economic Profit
The profit from producing goods and services while considering both explicit and implicit costs, including opportunity costs.
- Outline the relationship involving producer surplus, the decrease in expenses, and economic gain.
Verified Answer
NF
Natasha FloresMay 03, 2024
Final Answer :
A
Explanation :
Producer surplus in the long run is equal to the economic rent from scarce inputs, as all other costs and normal profits are accounted for in competitive markets, leaving only the rent from unique, scarce resources as surplus.
Learning Objectives
- Outline the relationship involving producer surplus, the decrease in expenses, and economic gain.