If a market is allowed to adjust freely to its equilibrium price and quantity,then an increase in demand will
A)increase producer surplus.
B)reduce producer surplus.
C)not affect producer surplus.
D)increase or decrease producer surplus or leave producer surplus unchanged.

Question

Quizplus · Accepted Answer

An increase in demand will lead to a higher equilibrium price and quantity, which increases producer surplus as producers receive more for their goods and sell a larger quantity.

If a Market Is Allowed to Adjust Freely to Its