It is possible for a firm to enjoy a short-run producer surplus, while at the same time suffering a short-run economic loss

Question

Quizplus · Accepted Answer

Producer surplus refers to the amount by which the price of a product exceeds the cost of production, and can be positive even if the firm is not making a profit. On the other hand, economic loss occurs when the total cost of production exceeds the total revenue earned, which can happen even if the price is above the average variable cost in the short run. Therefore, it is possible for a firm to have a short-run producer surplus, but still suffer a short-run economic loss if their total cost of production including fixed costs is higher than their total revenue.

It Is Possible for a Firm to Enjoy a Short-Run