Under what conditions will a firm's long-run producer surplus exceed their economic rents?
A) The firm requires land resources in the production process.
B) The firm has access to specialized tools or technology that other firms do not own.
C) The firm has access to knowledge or human capital that other firms do not own.
D) The firm is operating in an imperfectly competitive market.

Question

Quizplus · Accepted Answer

In an imperfectly competitive market, a firm's long-run producer surplus may exceed their economic rents as they are able to earn profits over and above what they would earn in a perfectly competitive market. This is because imperfect competition allows firms to have some degree of market power and ability to set prices higher than their costs, resulting in a higher producer surplus. However, in perfectly competitive markets, economic rents and producer surplus would be the same as firms would earn only normal profits. The choices A, B, and C may also lead to economic profits, but not necessarily to producer surplus exceeding economic rents.

Under What Conditions Will a Firm's Long-Run Producer Surplus Exceed