Producer surplus is defined as options: 1-The area above MC and above the price of output 2-The area below supply and above the price of output 3-The area above AVC and below ATC 4-The area below the market price of output and above suppl

Producer surplus is defined as options: 1-The area above MC and above the price of output 2-The area below supply and above the price of output 3-The area above AVC and below ATC 4-The area below the market price of output and above suppl

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Producer surplus is defined as

options:

1-The area above MC and above the price of output

2-The area below supply and above the price of output

3-The area above AVC and below ATC

4-The area below the market price of output and above supply

Definition Definition Measure of the cost of production per unit of output, including only variable costs such as wages, materials, and utilities. AVC is calculated by dividing total variable cost by the number of units produced. Understanding average variable cost is important for businesses to make decisions on pricing, production levels, and profitability.

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