A firm's economic profit is equal to producer surplus when A. total revenues equal total variable...
A firm's economic profit is equal to producer surplus when
| A. |
total revenues equal total variable costs. |
|
| B. |
the firm has no fixed costs. |
|
| C. |
average variable costs are minimized. |
|
| D. |
average fixed costs are spread over a large amount of production. |
Homework Answers
Ans: the firm has no fixed costs.
Explanation:
Producer’s surplus is not equal to it. Producer’s surplus subtracts only variable costs from total revenues.
Economic profit = Producer surplus - Fixed cost
So, economic profit is equal to producer surplus when fixed cost is 0.
Thus, option [B] is correct answer.
Add Answer to:
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