Asked by Squid Neutral on Jul 22, 2024

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Along the upward-sloping supply curve for brownies,a decrease in the price of brownies will:

A) increase producer surplus.
B) decrease producer surplus.
C) increase consumer surplus.
D) increase producer surplus and consumer surplus.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, often depicted as the area above the supply curve and below the market price.

Supply Curve

A graphical representation showing the relationship between the price of a good or service and the quantity of it that producers are willing and able to supply at different prices.

Price Of Brownies

The amount of money required to purchase a specific quantity of brownies in a given market.

  • Understand thoroughly the concept of producer surplus and how market condition changes influence it.
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Verified Answer

AA
Aaron ArseneJul 29, 2024
Final Answer :
B
Explanation :
A decrease in the price of brownies will result in a decrease in producer surplus because producers will receive less revenue for each unit sold. This is because the supply curve is upward-sloping, meaning that as the price of brownies decreases, producers are willing to supply fewer units. There is no reason to believe that consumer surplus will increase in this scenario. Therefore, the correct choice is B.