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:

Proportion

A part, share, or number considered in comparative relation to a whole.

Independent

Not influenced or controlled by others; acting freely.

P(A|B)

The likelihood of event A happening provided that event B has taken place.

P(B|A)

The probability of event B occurring given that event A has already occurred.