Which of the following will cause an increase in producer surplus?
A)The imposition of a binding price ceiling in the market
B)Buyers expect the price of the good to be lower next month
C)The price of a substitute increases
D)Income increases and buyers consider the good to be inferior

Question

Quizplus · Accepted Answer

Producer surplus increases when the price at which producers can sell their goods increases. If the price of a substitute increases, consumers may switch to buying the original good, increasing its price and thus increasing producer surplus.

Which of the Following Will Cause an Increase in Producer