Producer Surplus Definitely Exists When the

question 315

Multiple Choice

Producer surplus definitely exists when the

• A) price exceeds marginal benefit.
• B) price exceeds marginal cost.
• C) marginal cost exceeds the price.
• D) marginal benefit exceeds the price.
• E) marginal benefit exceeds the marginal cost.

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Definitions:

Total Revenue

The total amount of money a company receives from selling its goods or services without deducting any costs.

Total Cost

The aggregate amount of expenses incurred in the production of goods or services, including both fixed and variable costs.

Marginal Cost

The increase in total cost that arises from producing one additional unit of a good or service.

Average Variable Cost

The total variable costs divided by the quantity of output produced; it varies with output levels.