Register to reply

Mathematics of producer surplus wrong?

by Nikitin
Tags: mathematics, producer, surplus
Share this thread:
Nikitin
#1
May15-13, 01:32 PM
P: 618
The formula for producer surplus is:

Income - expenses = P*Q - ∫M(Q)dQ

However, shouldn't it be P*Q - (∫M(Q)dQ + FC), with FC= fixed costs?

I mean, the marginal costs are just the derivative of total costs, and thus integrating them is the same as just integrating the variable costs, ignoring the fixed costs of production.
Phys.Org News Partner Social sciences news on Phys.org
The nostalgia effect: Do consumers spend more when thinking about the past?
You deserve it! Are consumers more likely to buy unique products when made to feel special?
P90X? Why consumers choose high-effort products
Nikitin
#2
May15-13, 01:54 PM
P: 618
And concerning demand-curves:

Do they represent the quantity the market is willing to buy?


Register to reply

Related Discussions
Being a film producer/playwriter etc General Discussion 2
Elegant Mathematics Leads to Wrong Physics? Beyond the Standard Model 10
Has anything in mathematics ever been proven wrong? General Math 6
Should We Impose the Tax on the Producer or Consumer? Employer or Employee? Current Events 3
Surplus of Y on the wrong side Calculus 8