Assume the market is in equilibrium in the graph shown at demand D and supply S1. If the supply curve shifts to S2, and a new equilibrium is reached, equilibrium quantity will increase from 4 to 4.5 units. Which of the following is true?
A. Producer surplus increases by $3.00.
B. Producer surplus decreases by $8.50.
C. Producer surplus increases by $7.50.
D. Producer surplus decreases by $16.
A. Producer surplus increases by $3.00.
Economics
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If the demand for a good is elastic, then total revenue
a. increases as price increases. b. remains constant as quantity demanded increases. c. increases as price decreases. d. decreases as quantity demanded increases. e. decreases as price decreases.
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