Figure 7-11
-Refer to Figure 7-11.If the demand curve is D and the supply curve shifts from S' to S,what is the change in producer surplus?
A)Producer surplus increases by $625.
B)Producer surplus increases by $1,875.
C)Producer surplus decreases by $625.
D)Producer surplus decreases by $1,875.

Question

Figure 7-11 
-Refer to Figure 7-11.If the demand curve is D and the supply curve shifts from S' to S,what is the change in producer surplus?
A)Producer surplus increases by $625. 
B)Producer surplus increases by $1,875. 
C)Producer surplus decreases by $625. 
D)Producer surplus decreases by $1,875.

Quizplus · Accepted Answer

When the supply curve shifts from S' to S, it indicates an increase in supply, leading to a lower equilibrium price and higher equilibrium quantity. This shift results in an increase in producer surplus, which is the area above the supply curve and below the price level. The increase in producer surplus is calculated as $1,875.

Figure 7-11 -Refer to Figure 7-11.If the Demand Curve Is D and Is