Asked by mackenzie newland on Jul 23, 2024
Verified
(Figure: Producer Surplus III) Look at the figure Producer Surplus III.If the price of the good decreases from $2 to $1,producer surplus will decrease by:
A) $5.
B) $15.
C) $25.
D) $35.
Price Decreases
A reduction in the cost at which goods or services are sold, leading to an increase in the quantity demanded.
- Analyze different scenarios to determine changes in total producer surplus due to price changes.
Verified Answer
AM
Alexa MarchandJul 28, 2024
Final Answer :
B
Explanation :
Producer surplus is the area above the supply curve but below the price level. When the price decreases from $2 to $1, the producer surplus decreases by the area of the rectangle that is no longer included, which is $15 in this context.
Learning Objectives
- Analyze different scenarios to determine changes in total producer surplus due to price changes.
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