A fledgling microeconomics student is having some trouble grasping the concept of short-run producer surplus. In exasperation,

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A fledgling microeconomics student is having some trouble grasping the concept of short-run producer surplus. In exasperation, he blurts out, "This is absolute balderdash. I can understand that producer surplus is a good thing for firms because it measures the improvement in their welfare relative to a situation where they cannot participate in the market. But then I'm told that fixed costs are a component of short-run producer surplus. Aren't fixed costs a bad thing? They must be paid! How can they be one component of a good thing?" Can you set this student straight?
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Intermediate Microeconomics and Its Application

ISBN: 978-1133189039

12th edition

Authors: Walter Nicholson, Christopher M. Snyder

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