Suppose a firm has unavoidable fixed costs of $500,000 per year, and i
Suppose a firm has unavoidable fixed costs of $500,000 per year, and it decides to shut down. What is the firm’s producer surplus?
A) PS is positive in this case, but we cannot determine the value based on the given information
B) PS is negative in this case, but we cannot determine the value based on the given information
C) PS = -$500,000
D) PS = 0
ANSWER
A
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