The difference between producer surplus and profit is:
a. marginal cost
b. average cost
c. variable costs
d. fixed costs
e. total costs
Producer Surplus is formally defined as being the difference between how much a seller would be willing to sell the good/service for and how much they actually sold it for. It can also be defined as the difference between total revenue and total variable cost since fixed costs aren't taken into account in the short-run.
Answer and Explanation: 1
To solve this first remember the following:
- Profit=Total Revenue (TR)-Total Cost (TC)
- Producer Surplus=Total Revenue (TR)-Total Variable...
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fromChapter 3 / Lesson 61
Learn the producer surplus definition and understand how to calculate it with the producer surplus formula. See how a profit is made with a producer surplus example.