Assume that production costs rise and demand remains constant.The equilibrium price will ________ and the producer surplus will ________.

Question

Quizplus · Accepted Answer

When production costs rise and demand remains constant, the equilibrium price will increase because producers need to charge more to cover their higher costs. However, the producer surplus will decrease because the higher costs eat into the profits that producers would otherwise have made at the lower cost level.

Assume That Production Costs Rise and Demand Remains Constant