Question

Producer surplus for a perfectly competitive firm is:________

a. Revenue minus total cost
b. Revenue minus variable cost
c. Total cost minus variable cost
d. Revenue minus fixed cost

Answer 1

b. Revenue minus variable cost

Step-by-step explanation:

Producer surplus for a perfectly competitive firm is Revenue minus total variable cost. Option b is correct because the producer surplus is profit minus total variable cost when the fixed cost is zero and the marginal cost is increasing.