Table 4-6

-Refer to Table 4-6. The table above lists the marginal cost of polo shirts by Marko's, a firm that specializes in producing men's clothing. If the price of polo shirts decreases from $15 to $10,
A) consumers will buy no polo shirts.
B) the marginal cost of producing the third polo shirt will increase to $25.
C) producer surplus will fall from $13 to $3.
D) there will be a shortage of polo shirts.

Question

Table 4-6
 
-Refer to Table 4-6. The table above lists the marginal cost of polo shirts by Marko's, a firm that specializes in producing men's clothing. If the price of polo shirts decreases from $15 to $10,
A) consumers will buy no polo shirts. 
B) the marginal cost of producing the third polo shirt will increase to $25. 
C) producer surplus will fall from $13 to $3. 
D) there will be a shortage of polo shirts.

Quizplus · Accepted Answer

When the price decreases from $15 to $10, the producer surplus, which is the difference between what producers are willing to accept and what they actually receive, will decrease. The new producer surplus will be calculated based on the new price, leading to a fall from $13 to $3.

Table 4-6 -Refer to Table 4-6. the Table Above Lists the Marginal