Other things being equal, an increase in marginal cost reduces producer surplus.

Name: Other things being equal, an increase in marginal cost reduces producer surplus.
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Question

Quizplus · Accepted Answer

This is because producer surplus is the difference between the price received by the producer and the cost of production. If the cost of production (marginal cost) increases, the producer will receive less surplus because they are receiving a smaller profit margin.

Other Things Being Equal, an Increase in Marginal Cost Reduces