Table 4-3

-Refer to Table 4-3.The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear.If the price of cowboy hats increases from $38 to $46,
A)consumers will buy no cowboy hats.
B)the marginal cost of producing the third cowboy hat will increase to $46.
C)producer surplus will rise from $22 to $46.
D)there will be a surplus of cowboy hats.

Question

Table 4-3
 
-Refer to Table 4-3.The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear.If the price of cowboy hats increases from $38 to $46,
A)consumers will buy no cowboy hats. 
B)the marginal cost of producing the third cowboy hat will increase to $46. 
C)producer surplus will rise from $22 to $46. 
D)there will be a surplus of cowboy hats.

Quizplus · Accepted Answer

Producer surplus increases because the firm receives a higher price for each hat sold, while the marginal cost remains the same.

Table 4-3 -Refer to Table 4-3.The Table Above Lists the Marginal Cost