- #1

- 726

- 27

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.

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.

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