A perfectly competitive hardware manufacturer has total revenue of $85 million,

Question

A perfectly competitive hardware manufacturer has total revenue of $85 million, total variable costs of $45 million, and fixed costs of $10 million. What is the firm’s producer surplus?
A) $85 million B) $70 million C) $40 million D) $30 million
The answer is C. A step by step solution would be very helpful. Thank you! A perfectly competitive hardware manufacturer has total revenue of $85 million, total variable costs of $45 million, and fixed costs of $10 million. What is the firm’s producer surplus?
A) $85 million B) $70 million C) $40 million D) $30 million
The answer is C. A step by step solution would be very helpful. Thank you!
A) $85 million B) $70 million C) $40 million D) $30 million
The answer is C. A step by step solution would be very helpful. Thank you!

Explanation / Answer

Ans:

Option D

$30 million

Producer Surplus = Selling Price - Economic Cost

= $85 million - ($45 million + $10 million)

= $30 million

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