Suppose the demand for peaches decreases.What will happen to producer surplus in the market for peaches?
A)It increases.
B)It decreases.
C)It remains unchanged.
D)It may increase,decrease,or remain unchanged.

Question

Quizplus · Accepted Answer

If the demand for peaches decreases, the price at which peaches are sold will also decrease. As a result, the producer surplus in the peach market will decrease because producers will receive less revenue for their goods than they would if the demand remained the same. Therefore, the best choice is B, which states that producer surplus decreases when demand decreases.

Suppose the Demand for Peaches Decreases