20. A firm's economic profit is equal to producer surplus when A. average variable costs are...

Question

Question

20. A firm's economic profit is equal to producer surplus when

	A.	average variable costs are minimized.
	B.	average fixed costs are spread over a large amount of production.
	C.	the firm has no fixed costs.
	D.	total revenues equal total variable costs.

Answer 1

Answer #1

The answer is Option (C) the firm has no fixed costs.

Economic profit = Producer surplus - Fixed cost

If there is no fixed cost than economic profit is equal to producer surplus.

Answer 2

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