Asked by Bailey Hasler on May 06, 2024
Verified
Assuming that gasoline and cars are complements in consumption,if the price of gasoline rises,the producer surplus of auto manufacturers decreases.
Producer Surplus
Producer surplus is the difference between what producers are willing to accept for a good or service versus what they actually receive, reflecting extra benefit.
Complements In Consumption
Goods that are often used together, where the increase in demand for one leads to an increase in demand for the other.
- Comprehend the idea of substitutes and complements in consumption and their influence on surplus.
Verified Answer
LW
Linzey WatkinsMay 09, 2024
Final Answer :
True
Explanation :
When the price of gasoline rises, the demand for cars decreases as the cost of operating them increases. This leads to a decrease in producer surplus for auto manufacturers as they are selling fewer cars at a lower price.
Learning Objectives
- Comprehend the idea of substitutes and complements in consumption and their influence on surplus.