For an Individual Firm Operating in the Long Run, Producer

question 21

Multiple Choice

For an individual firm operating in the long run, producer surplus equals:

• A)the difference between total revenues and total opportunity costs.
• B)the difference between total revenues and total sunk costs.
• C)economic rent.
• D)The difference between market demand and market supply.

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Definitions:

Gross Profit

The financial metric resulting from subtracting the cost of goods sold from net sales revenue.

Operating Expenses

Operating expenses are costs associated with the day-to-day functions of a business, excluding direct production costs but including things like rent, utilities, and staff wages.

Sales Revenue

The total amount of money generated from selling goods or services before any expenses are deducted.

Gross Profit Rate

The ratio of gross profit to net sales, indicating the efficiency of a company in managing its production and labor costs.