Changes in a firm's profit induce ________ in the producer surplus (PS).
A) identical changes
B) smaller changes
C) larger changes
D) no changes

Question

Quizplus · Accepted Answer

Changes in a firm's profit directly affect the producer surplus because the producer surplus is essentially the profit that producers make after covering their production costs. An increase in profit would increase the producer surplus, and a decrease in profit would decrease the producer surplus, hence the changes are identical.

Changes in a Firm's Profit Induce ________ in the Producer