When Prices Drop in Response to a Decline in Demand

question 9

Multiple Choice

When prices drop in response to a decline in demand for an increasing cost industry

• A)producer surplus will increase but rents may decrease.
• B)rent earned by elastically supplied inputs will decline by more than rent earned by inelastically supplied inputs.
• C)rent earned by elastically supplied inputs will decline by less than rent earned by inelastically supplied inputs.
• D)both producer surplus and rents will increase.