The shutdown decision can be restated in terms of producer surplus by saying that a firm should produce in the short run as long as:
A) revenue exceeds producer surplus.
B) producer surplus is positive.
C) producer surplus exceeds fixed cost.
D) producer surplus exceeds variable cost.
E) profit and producer surplus are equal.

Question

Quizplus · Accepted Answer

In the short run, a firm should produce as long as its total revenue exceeds its total variable cost. The portion of revenue that is above and beyond the variable cost is the producer surplus. Therefore, as long as the producer surplus is positive, the firm should continue to produce.

The Shutdown Decision Can Be Restated in Terms of Producer