Table 4-2

-Refer to Table 4-2.The table above lists the marginal cost of cowboy hats by The Waco Kid,a firm that specializes in producing western wear..If the price of cowboy hats increases from $38 to $46
A) consumers will buy no cowboy hats.
B) the marginal cost of producing the third cowboy hat will increase to $46.
C) producer surplus will rise from $22 to $46.
D) there will be a surplus of cowboy hats.

Question

Table 4-2
 
-Refer to Table 4-2.The table above lists the marginal cost of cowboy hats by The Waco Kid,a firm that specializes in producing western wear..If the price of cowboy hats increases from $38 to $46
A) consumers will buy no cowboy hats. 
B) the marginal cost of producing the third cowboy hat will increase to $46. 
C) producer surplus will rise from $22 to $46. 
D) there will be a surplus of cowboy hats.

Quizplus · Accepted Answer

When the price increases, the producer surplus increases because the difference between the price and the marginal cost widens, leading to higher profits for the producer.

Table 4-2 -Refer to Table 4-2.The Table Above Lists the Marginal Cost