Question

What is the difference between economic profit and producer surplus? (Brief explain in less than three lines)

Answer 1

An economic profit or loss is the difference between the revenue received from the sale of an output and the opportunity cost of the inputs used. Producer surplus is an economic measure of the difference between the amount a producer of a good receives and the minimum amount the producer is willing to accept for the good. Thus, producer surplus aggregates over all the firms and producer surplus depend on the willingness to sell, the economic profit does not.