Suppose That the Market Price for Pizzas Increases

question 71

Multiple Choice

Suppose that the market price for pizzas increases.The increase in producer surplus comes from the benefit of the higher prices to

• A)only existing sellers who now receive higher prices on the pizzas they were already selling.
• B)only new sellers who enter the market because of the higher prices.
• C)both existing sellers who now receive higher prices on the pizzas they were already selling and new sellers who enter the market because of the higher prices.
• D)Producer surplus does not increase;it decreases.

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Definitions:

Year 2

Refers to the second year of a specific time frame, project, or financial period.

Variable Costing

A costing method that includes only variable manufacturing costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of a product, excluding fixed manufacturing overhead.

Unit Product Cost

The total cost (variable and fixed) associated with producing one unit of a product.

Year 2

A fictional or unspecified second year in a sequence or period being referred to, often relative to a specific context or event.