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:

Decline

A decrease in quantity, quality, or strength over a period, often observed in economic indicators, stock prices, or physical capacities.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return.

Payment Stream

Payment stream refers to a series of payments made over time, such as in an annuity, loan repayments, or any regular monetary transfers.