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Producer surplus

Please check this for me.

If the price of a good rises, then producer surplus
a. will increase
b. will decrease
c. will remain the same
d. may change but we can't tell how

it is a

If there is an increase in demand, total surplus
a. will increase
b. will decrease
c. will remain the same
d. may change but we can't tell how

it is b

If there is a decrease in supply, total surplus
a. will increase
b. will decrease
c. will remain the same
d. may change but we can't tell how

it is b

If the government imposes a price floor in the market for grapefruit, total surplus
a. will increase
b. will decrease
c. will not change
d. may change but we cannot determine the change without more information

it is b

If the government removed the excise tax on gasoline, which of the following would not occur?
a. Consumer surplus would increase
b. Producer surplus would increase
c. Producer surplus would decrease
d. Total surplus would increase.

It is c

Solution Preview

Whenever a transaction occurs between a buyer and seller, one or both of the parties may have a "surplus." In the case of the consumer, he may have been willing to pay more than he actually did for a good. The difference between what he paid and what he would have been willing to pay is the surplus. In the case of the producer, the difference between what he sold the good for and the lowest price he would have accepted is his surplus. This concept is ...

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