(Figure: The Import-Competing Industry) What is the increase in producer surplus if the demand for the product increases and the new equilibrium price is 30 and quantity is 50?
A) $525
B) $475
C) $255
D) $325

Question

(Figure: The Import-Competing Industry) What is the increase in producer surplus if the demand for the product increases and the new equilibrium price is 30 and quantity is 50? 
A) $525 
B) $475 
C) $255 
D) $325

Quizplus · Accepted Answer

The increase in producer surplus can be found by comparing the difference between the original equilibrium price and the new equilibrium price, and then multiplying that by the quantity produced in the import-competing industry.

Original equilibrium price: $25
New equilibrium price: $30
Quantity produced: 50

Increase in price: $30 - $25 = $5

Increase in producer surplus: $5 x 50 = $250

Therefore, the new producer surplus would be the original surplus of $225 plus the increase of $250, for a total of $475. Hence, the best choice is option B.

(Figure: the Import-Competing Industry) What Is the Increase in Producer