Figure 7-15
-Refer to Figure 7-15.When the price falls from P2 to P1,which of the following would not be true?
A)The sellers who still sell the good are worse off because they now receive less.
B)Some sellers leave the market because they are not willing to sell the good at the lower price.
C)The total cost of what is now sold by sellers is actually higher than it was before the decrease in the price.
D)Producer surplus would fall by area A + B.

Question

Figure 7-15 
-Refer to Figure 7-15.When the price falls from P2 to P1,which of the following would not be true?
A)The sellers who still sell the good are worse off because they now receive less. 
B)Some sellers leave the market because they are not willing to sell the good at the lower price. 
C)The total cost of what is now sold by sellers is actually higher than it was before the decrease in the price. 
D)Producer surplus would fall by area A + B.

Quizplus · Accepted Answer

If the price falls from P2 to P1, the quantity demanded will increase, and some sellers may leave the market as they can no longer sell at the lower price. The remaining sellers who choose to sell at the lower price will receive less revenue, indicating a decrease in producer surplus. However, the cost to produce each unit of the good remains the same, so the total cost of what is now sold by sellers should not increase. Therefore, choice C would not be true.

Figure 7-15 -Refer to Figure 7-15.When the Price Falls from P2 to from P2