A producer operating in a perfectly competitive market has chosen his output level to maximize profit. At

Question:

A producer operating in a perfectly competitive market has chosen his output level to maximize profit. At that output, his revenue and costs are as follows:
• Revenue $200
• Variable costs $120
• Sunk fixed costs $60
• Nonsunk fixed costs $40
Calculate his producer surplus and his profits. Which (if either) of these should he use to determine whether he should exit the market in the short run? Briefly explain.