1. ECONOMICS 211 Chapter 7 – Clicker Question Set #3

2. Refer to the figure below. When the price falls from P 2 to P 1, producer surplus 1. decreases by an amount equal to C. 2. decreases by an amount equal to A + B. 3. decreases by an amount equal to A + C. 4. increases by an amount equal to A + B.

3. Refer to the figure below. When the price falls from P2 to P1, which of the following would not be true? 1. The sellers who still sell the good are worse off because they now receive less. 2. Some sellers leave the market because they are not willing to sell the good at the lower price. 3. The total cost of what is now sold by sellers is actually higher than it was before the decrease in the price. 4. Producer surplus would fall by area A + B.

4. Refer to the figure below. Area B represents 1. the combined profits of all producers when the price is P2. 2. the increase in producer surplus to all producers as the result of an increase in the price from P1 to P2. 3. producer surplus to new producers entering the market as the result of an increase in the price from P1 to P2. 4. that portion of the increase in producer surplus that is offset by a loss in consumer surplus when the price increases from P1 to P2.