4. If demand for apples increased as a result of a news story that highlighted the health benefits of two apples a day, what would happen to producer surplus?
Added by Marc F.
Close
Step 1
This leads to a higher equilibrium price and a higher equilibrium quantity. Show more…
Show all steps
Your feedback will help us improve your experience
Dave Kratz and 55 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
Dave K.
Suppose that last year the equilibrium price and quantity of good X were $10 and 5 million pounds, respectively. Because of strong demand this year, the equilibrium price and quantity of good X are $12 and 7 million pounds, respectively. Assuming that the supply curve of good X is linear, producer surplus: A. increased from $4.2 million to $5.6 million. B. increased from $12.5 million to $24.5 million. C. increased from $3 million to $7 million. D. increased from $25 million to $42 million.
Andrew D.
Use the graph below to depict the following. Assume the initial market price is $5. a. Identify the area of the initial producer surplus, PS1, if the market price is $5. Next, assume demand decreases and the market price falls to $4. Draw the new demand curve and identify the new area of producer surplus, PS2, on the graph. Instructions: (1) Use the tool provided 'PS1' to identify the initial area of producer surplus. This will drop a small triangle with 3 endpoints onto the graph. Drag the endpoints to the appropriate position to identify the area of the initial producer surplus. (2) Then use the tool provided 'D2' to draw the new demand curve. (3) Use the tool provided 'PS2' and follow the same process as above to identify the second area of producer surplus. b. Due to the decrease in price, producer surplus - rises by more than $40. - falls by less than $40. - falls by more than $40. - rises by less than $40.
Akash M.
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
18,000,000+
Students on Numerade
Trusted by students at 8,000+ universities
Watch the video solution with this free unlock.
EMAIL
PASSWORD