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Refer to Figure 7-15. When the price rises from P1 to P2, what area represents the increase in producer surplus?Group of answer choicesAA+BA+B+CG

Question

Refer to Figure 7-15. When the price rises from P1 to P2, what area represents the increase in producer surplus?

Group of answer choices
AA + BA + B + CG

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Solution

Without the actual Figure 7-15, it's difficult to provide an accurate answer. However, generally in economics, when the price rises from P1 to P2, the increase in producer surplus is typically represented by the area between the supply curve and the new price line, up to the point where the old price line intersected the supply curve.

So, if A represents the area under the supply curve up to P1, and B represents the area between P1 and P2 under the supply curve, then the increase in producer surplus would be represented by area B.

If C is an area above P2, it wouldn't typically represent producer surplus, as producer surplus is usually the area below the price line and above the supply curve.

So, the answer to your question, based on typical economic graphs, would be B. But please refer to Figure 7-15 for the exact areas referred to in your question.

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