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Supply and Demand Curves for an Item of Medical Equipment

Question 65

Multiple Choice

Supply and demand curves for an item of medical equipment are shown in the graph below. In order to compete with a new product by a rival company, the price is temporarily lowered to $20,000. What is the reduction (from equilibrium) in producer surplus that results from this artificially low price? Supply and demand curves for an item of medical equipment are shown in the graph below. In order to compete with a new product by a rival company, the price is temporarily lowered to $20,000. What is the reduction (from equilibrium)  in producer surplus that results from this artificially low price?   A) The producer surplus is reduced by $ 48,000. B) The producer surplus is reduced by $ 59,000 C) The producer surplus is unaffected. D) The producer surplus is reduced by $ 36,000


A) The producer surplus is reduced by $ 48,000.
B) The producer surplus is reduced by $ 59,000
C) The producer surplus is unaffected.
D) The producer surplus is reduced by $ 36,000

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