Suppose That Last Year the Equilibrium Price and the Quantity

question 77

Multiple Choice

Suppose that last year the equilibrium price and the quantity of good X were $10 and 5 million pounds, respectively. Because of strong demand this year, the equilibrium price and the quantity of good X are $12 and 7 million pounds, respectively. Assuming that the supply curve of good X is linear, producer surplus:

• A) decreased from $8 million to $6 million.
• B) increased from $12.5 million to $24.5 million.
• C) increased from $3 million to $7 million.
• D) increased from $4.2 million to $5.6 million.

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Definitions:

American Goods

Products that are manufactured or produced in the United States. They often reflect the quality, labor standards, and manufacturing practices of the U.S.

Yen

Yen is the official currency of Japan.

Exchange Rate

The price at which one currency can be exchanged for another in the foreign exchange market.

Raspberries

Edible fruits from plants in the genus Rubus, characterized by their aggregate structure of small drupelets.