If demand for output rises,producers' surplus increases more for factors with elastic supply curves than for other factors.

Question

Quizplus · Accepted Answer

Producers' surplus increases more for factors with inelastic supply curves because the limited availability of these factors leads to higher prices when demand rises, thus increasing the surplus more significantly than for factors with elastic supply curves, where supply can more easily adjust to meet demand.

If Demand for Output Rises,producers' Surplus Increases More for Factors