Figure 7-9

-Refer to Figure 7-9.If the demand curve is D and the supply curve shifts from S' to S,what is the change in producer surplus?
A) Producer surplus increases by $625.
B) Producer surplus increases by $1,875.
C) Producer surplus decreases by $625.
D) Producer surplus decreases by $1,875.

Question

Figure 7-9
 
-Refer to Figure 7-9.If the demand curve is D and the supply curve shifts from S' to S,what is the change in producer surplus?
A) Producer surplus increases by $625. 
B) Producer surplus increases by $1,875. 
C) Producer surplus decreases by $625. 
D) Producer surplus decreases by $1,875.

Quizplus · Accepted Answer

When the supply curve shifts from S' to S, the producer surplus increases because the supply curve shift indicates a decrease in production costs or an increase in production efficiency, leading to a higher quantity supplied at the same price. The increase in producer surplus is calculated based on the area between the old and new supply curves up to the equilibrium quantity, which is $1,875.

Figure 7-9 -Refer to Figure 7-9.If the Demand Curve Is D and Curve