An Increase in Producer Surplus Would Most Likely Occur If

question 143

Multiple Choice

An increase in producer surplus would most likely occur if:

• A)an effective price floor was imposed.
• B)an effective price ceiling was imposed.
• C)the market price of the good decreased.
• D)no changes occurred in the market.

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Definitions:

Variable Cost

Costs that change in proportion to the level of production or business activity.

Fixed Cost

Costs that do not change with the level of production or business activity, such as rent, salaries, and insurance.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal.