In the long run,aggregate producer surplus is zero in:
A)industries with positive accounting profits.
B)industries with a positive economic profit.
C)decreasing-cost industries.
D)constant-cost competitive industries.

Question

Quizplus · Accepted Answer

In constant-cost competitive industries, the entry of new firms does not affect the prices, hence the producer surplus remains constant. In the long run, the producer surplus is zero because any positive profits would attract new firms, which would increase supply and decrease prices until only normal profits are being earned, and any losses would cause firms to exit the industry, decreasing supply and increasing prices until normal profits are being earned. Therefore, in the long run, the producer surplus is zero.

In the Long Run,aggregate Producer Surplus Is Zero In