If the supply curve of ice cream is upward sloping and the demand for it decreases,there will be _____ in producer surplus.
A) an increase
B) a decrease
C) no change
D) It's impossible to tell what will happen to producer surplus.

Question

Quizplus · Accepted Answer

If demand for ice cream decreases, there will be a decrease in the equilibrium price of ice cream. With an upward sloping supply curve, this means that the quantity supplied will also decrease. As a result, the producer surplus (the difference between the market price and the minimum price at which producers are willing to sell) will decrease, because producers are receiving less revenue from selling less ice cream. Therefore, the correct answer is B) a decrease.

If the Supply Curve of Ice Cream Is Upward Sloping