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Author Question: Producer surplus is the sum of the profits earned by all firms in a market. Indicate whether the ... (Read 16 times)

pepyto

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on: Jul 1, 2018
Producer surplus is the sum of the profits earned by all firms in a market.
 
  Indicate whether the statement is true or false

Question 2

Changes in a firm's profit induce ________ in the producer surplus (PS).
 
  A) identical changes
  B) smaller changes
  C) larger changes
  D) no changes
Microeconomics ¦ Perloff ¦ 8th Edition
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lorealeza77

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Reply #1 on: Jul 1, 2018
Answer to Question 1

False. This definition ignores fixed costs. Producer surplus minus fixed costs equals profits.

Answer to Question 2

A


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