Mathematics of producer surplus wrong?

1. May 15, 2013

Nikitin

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.

Last edited: May 15, 2013
2. May 15, 2013

Nikitin

And concerning demand-curves:

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