Producer surplus for a perfectly competitive firm is ________.

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the price received by the firm for its output and the minimum amount necessary to induce the firm to produce that output (which is its marginal cost). In a perfectly competitive market, the firm is a price taker and thus the market price is equal to the firm's marginal cost. So, the area under the market price and above the firm's marginal cost curve represents the producer surplus for the firm.

Producer Surplus for a Perfectly Competitive Firm Is ________