Which of the following events would increase producer surplus?
A)Sellers' costs stay the same and the price of the good increases.
B)Sellers' costs increase and the price of the good stays the same.
C)Sellers' costs increase and the price of the good decreases.
D)Sellers' costs stay the same and the price of the good decreases.

Question

Quizplus · Accepted Answer

Producer surplus increases when the difference between the price sellers receive for a good and their costs to produce it increases. Choice A directly leads to an increase in producer surplus because if sellers' costs stay the same and the price of the good increases, sellers are receiving more for each unit sold without any increase in costs.

Which of the Following Events Would Increase Producer Surplus