Question

52) Producer surplus A) increases if market price rises and the supply B) is the same as the marginal cost. C) is equal to the maximum price consumers are D) decreases if market price rises and the supply curve does not shift. willing to pay curve does not shift.

Answer 1

Ans. (a) increase 1 price ouses & Supply Curve does not sucht The above diaqram gives us the Supply Curne. On the hosuzontal are, we have quantity & on the vertical axis we have prices. The upward sloping supply g Curve gives a positive relation between quantity Supplied and price level. Producer Surplus is the area below the market price and above the Supply Curve. It à u equal to profit plus fixed cost. At price level of 'a's producer Surplus is quien by the area of the triangle 'Abc'. Now as paico level sides to 'd', with no change in the supply Curve, the producer Swipeus increases & is given by the area of the a buangle des : area of the triangle deri e greater than the area of the triangle abc :. producen supues has increased.