A firm's producer surplus equals its

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the revenue earned by a firm and its avoidable costs. Sunk costs are irrelevant in determining producer surplus, as they are costs that have already been incurred and cannot be recovered. Therefore, options C and D are not correct. Option A is incorrect as it equates producer surplus with profit, whereas producer surplus is the surplus earned by a firm over and above its avoidable costs. Hence, the correct answer is B.

A Firm's Producer Surplus Equals Its