Table 4-3

-Refer to Table 4-3.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 increases from $15 to $20
A)consumers will buy no polo shirts.
B)the marginal cost of producing the third polo shirt will increase to $20.
C)producer surplus will rise from $13 to $28.
D)there will be a surplus of polo shirts.

Question

Table 4-3
 
-Refer to Table 4-3.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 increases from $15 to $20
A)consumers will buy no polo shirts. 
B)the marginal cost of producing the third polo shirt will increase to $20. 
C)producer surplus will rise from $13 to $28. 
D)there will be a surplus of polo shirts.

Quizplus · Accepted Answer

When the price of polo shirts increases from $15 to $20, producer surplus increases because producers are now receiving more for each polo shirt than before. Producer surplus is the area above the supply curve (or marginal cost curve in this case) and below the price level. As the price increases, this area grows, indicating a rise in producer surplus. The specific numbers ($13 to $28) would depend on the details in Table 4-3, which are not provided, but the concept that producer surplus increases with a price increase is accurate.

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