Figure 7-5

-Refer to Figure 7-5. If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus?
A)Producer surplus increases by $3,125
B)Producer surplus increases by $5,625
C)Producer surplus decreases by $3,125
D)Producer surplus decreases by $5,625

Question

Figure 7-5
 
-Refer to Figure 7-5. If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus?
A)Producer surplus increases by $3,125 
B)Producer surplus increases by $5,625 
C)Producer surplus decreases by $3,125 
D)Producer surplus decreases by $5,625

Quizplus · Accepted Answer

Producer surplus increases by the area of the triangle formed by the shift in the demand curve, which is $3,125.

Figure 7-5 -Refer to Figure 7-5. If the Supply Curve Is S