Figure 7-17
-Refer to Figure 7-17.Suppose the market starts out in equilibrium with demand curve D and supply curve S.Next,suppose demand shifts left so as to decrease the quantity demanded by 20 units at every price.What is the change in producer surplus as a result of this demand shift?
A)$80
B)$160
C)$240
D)$320

Question

Figure 7-17 
-Refer to Figure 7-17.Suppose the market starts out in equilibrium with demand curve D and supply curve S.Next,suppose demand shifts left so as to decrease the quantity demanded by 20 units at every price.What is the change in producer surplus as a result of this demand shift?
A)$80 
B)$160 
C)$240 
D)$320

Quizplus · Accepted Answer

The change in producer surplus is calculated as the area of the triangle formed by the decrease in quantity and the original and new equilibrium prices. Given the decrease in quantity is 20 units, and assuming the price change is consistent with the options provided, the change in producer surplus is $160.

Figure 7-17 -Refer to Figure 7-17.Suppose the Market Starts Out in Equilibrium