Producer surplus is:
A)always equal to zero for a competitive firm in long run equilibrium.
B)always greater than zero for a competitive firm in long run equilibrium.
C)defined as the area below the supply curve and above the price.
D)defined as the area above the supply curve and above the price.

Question

Quizplus · Accepted Answer

Producer surplus is defined as the area above the supply curve and below the price. In long-run equilibrium, the price is equal to the minimum average variable cost, so the producer surplus is zero.

Producer Surplus Is