If we assume perfect competition in the product markets, producer surplus is:

Question

Quizplus · Accepted Answer

In perfect competition, firms earn only normal profits, which means that their economic profits are zero. Therefore, producer surplus, which is the difference between the market price and the marginal cost of production, is equal to the return to the fixed factors of production, such as capital and land. In other words, it represents the excess of total revenue over variable costs, which are the costs that vary with the level of output, such as labor and raw materials. Thus, choice D is the correct answer.

If We Assume Perfect Competition in the Product Markets, Producer