Figure 7-17 -Refer to Figure 7-17.If the Demand Curve Is D and Is

question 58

Multiple Choice

Figure 7-17
-Refer to Figure 7-17.If the demand curve is D and the supply curve shifts left from S to S',what is the change in producer surplus when comparing the new equilibrium with the original equilibrium?

• A)Producer surplus increases by $225.
• B)Producer surplus increases by $675.
• C)Producer surplus decreases by $225.
• D)Producer surplus decreases by $675.

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Definitions:

Perpetual Inventory System

A system that keeps track of each withdrawal or addition to inventory continuously, so records are always current.

Buffer Stock

An inventory reserve kept on hand to protect against variability in demand or supply.