When Demand Increases So That Market Price Increases, Producer Surplus

question 71

True/False

When demand increases so that market price increases, producer surplus increases because (1) producer surplus received by existing sellers increases, and (2) new sellers enter the market.

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Definitions:

Depreciation

The accounting method of allocating the cost of a physical or tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.

EBIT

A financial metric that calculates a company's profit by including all costs except for interest and income tax expenses, known as Earnings Before Interest and Taxes.

Free Cash Flow

The amount of cash a company generates after accounting for capital expenditures needed for operations. It is an important measure of financial performance and liquidity.

Capital Expenditures

Long-term investments made by a company in buildings, equipment, or other assets to improve or maintain its business operations.