According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:
A) producer surplus will change from (D +
E) to (D + E + B +
C).
B) producer surplus will change from (B + C + D +
E) to D only.
C) producer surplus will change from (D +
E) to (D +
B).
D) producer surplus will change from (D +
B) to (D +

Question

According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:
A) producer surplus will change from (D + 
E) to (D + E + B + 
C). 
B) producer surplus will change from (B + C + D + 
E) to D only. 
C) producer surplus will change from (D + 
E) to (D + 
B). 
D) producer surplus will change from (D + 
B) to (D +

Quizplus · Accepted Answer

When the market price increases from equilibrium to $10, the quantity supplied will increase from Q1 to Q2 resulting in two changes in producer surplus. 
Firstly, the original producers (from Q1 to equilibrium) will experience increased surplus as they can sell at a higher price. This change is represented by the movement from (D+E) to (D+B). 
Secondly, new producers will enter the market to take advantage of the higher price. This change is represented by the movement from (0) to (C). 
However, there will be a decrease in surplus for the original producers who continue to produce as their surplus will decrease due to the increase in input prices resulting from the increased production. This decrease is represented by the movement from (B) to (E).

Therefore, overall the producer surplus will change from (D + E) to (D + B).

According to the Graph Shown, If the Market Goes from Equilibrium