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If Prices Rise, What Happens to Producer Surplus (All Other

Question 93

Multiple Choice

If prices rise, what happens to producer surplus (all other things being equal) ?


A) It falls, because fewer people buy goods.
B) It falls, because it encourages competition, which reduces profits.
C) It rises, because each producer is getting more surplus per good sold.
D) It stays the same, because the forces increasing the surplus counteract the forces reducing it.

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