In: Economics
If the price of a product increases:
Multiple Choice
the price increase has no effect on the producer surplus.
the consumer surplus will not change.
the consumer surplus will increase.
the producer surplus will increase.
Answer= The producer surplus increases
reason- The producer surplus is the difference between the price level and the minimum price producer is Willing to get.
Producer surplus is the area between the price level and the supply curve.
So the price rises, producer surplus rises.