Consider the following statements when answering this question: I. In the long-run equilibrium of a perfectly competitive market, a firm's producer surplus equals the sum of the economic rents earned on its inputs to production.
II) In the long-run equilibrium of a perfectly competitive market, the amount of economic profit earned can differ across firms, but not the amount of producer surplus.
A) I and II are true.
B) I is true, and II is false.
C) I is false, and II is true.
D) I and II are false.

Question

Quizplus · Accepted Answer

Statement I is true as in the long-run equilibrium, a firm's producer surplus should equal the sum of the economic rents earned on its inputs to production. However, Statement II is false as in the long-run equilibrium of a perfectly competitive market, economic profits should be zero for all firms, meaning that the amount of producer surplus can also differ across firms depending on their costs of production.

Consider the Following Statements When Answering This Question: I