Is Producer Surplus a Surplus to the Producer?

Wenli Cheng

No 2023-19, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: This paper clarifies the concept of producer surplus in the short-run and the long-run contexts. It shows that in the short run, producer surplus is the sum of economic profit (or loss) to the firm and quasi-rent which goes to owners of fixed factors. In the long run, producer surplus is rent, which goes to owners of specialised factors of production. In either case, producer surplus is not necessarily a surplus to the producer which is commonly understood to be the firm.

Keywords: Producer surplus; profit; rent (search for similar items in EconPapers)
JEL-codes: F40 (search for similar items in EconPapers)
Date: 2023-10
New Economics Papers: this item is included in nep-ind and nep-mic
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