Question

c. If the price rises to S6, how does quantity supplied change? How does Emie's producer surplus change? Show these changes in your graph.

Answer 1

If price increases by $6 ,according to the law if supply , there is a positive relationship between price level and quantity that suppliers are willing to sell, thus when price increases the quantity supplied will also increase thus there will be a right shift in supply curve thus an excess supply in economy will be there.

Change in price and change in the amount of surplus a producer will receive are directly related. Graphically , producer surplus is above the supply curve and below the equilibrium prim price . now if equilibrium price increases the amount of producer surplus and the quantity supplied increases.

Poy P, inanese in • Price by $6 Quantity supplied increses from go to ås. dd Go As Quantity before as. A cbf and PS - Aabe often cas = nedf and PS = edba this PS has increased.