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AP Microeconomics
Unit 3 – Production, Cost, and the Perfect Competition Model
Topic 3.6
What happens to a firm's producer surplus when the price is less than the variable cost in a perfectly competitive market?
The firm's producer surplus increases.
The firm's producer surplus becomes zero.
The firm's producer surplus remains unchanged.
The firm experiences a negative producer surplus.
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AP Microeconomics - 3.6 Firms' Short-Run Decisions to Produce and Long-Run Decisions to Enter or Exit a Market
Key terms
Perfectly Competitive Market
Producer Surplus
Price
Variable Cost
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Cram Mode
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© 2024 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.
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