Question

producer surplus in a perfectly competitive industry is: question 14 options: a) the difference between revenue and fixed cost. b) the difference between revenue and variable cost. c) the difference between revenue and total cost. d) the same thing as revenue. e) the difference between profit at the profit-maximizing output and profit at the profit-maximizing output.

Answer 1

Producer surplus in a perfectly competitive industry is the difference between total revenue and total cost.

Step-by-step explanation:

A perfectly competitive firm in a perfectly competitive industry can determine its producer surplus by finding the difference between total revenue and total cost. Producer surplus represents the amount of profit that a firm makes by producing and selling goods or services in a competitive market.

For example, if a firm's total revenue is $1,000 and its total cost is $800, then the producer surplus would be $200. This surplus represents the profit that the firm has earned above its costs.