In the long-run equilibrium in perfect competition,
A) producer surplus is positive.
B) producer surplus is negative.
C) producer surplus is greater than consumer surplus.
D) producer surplus is less than consumer surplus.

Question

Quizplus · Accepted Answer

In long-run equilibrium in perfect competition, producer surplus is equal to zero because firms earn only normal profits. Therefore, producer surplus is less than consumer surplus, which is the difference between the price consumers are willing to pay and the price they actually pay.

In the Long-Run Equilibrium in Perfect Competition