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Exploring Economics

8th Edition
Robert L. Sexton
Publisher: SAGE Publications, Inc
ISBN: 9781544336329

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BuyFindarrow_forward

Exploring Economics

8th Edition
Robert L. Sexton
Publisher: SAGE Publications, Inc
ISBN: 9781544336329
Chapter 7, Problem 4P
Textbook Problem
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If demand for apples increased as a result of a news story that highlighted the health benefits of two apples a day, what would happen to producer surplus?

To determine

The effect of increased demand of apples on the producer surplus if it is highlighted that the health benefits will be increased when consuming twice apples a day.

Explanation of Solution

It is given that the demand for the apples has been increased. It would lead to increase in the demand curve for the apples. Diagrammatically, it can be explained as done below:

In this diagram, DD and SS are the initial demand and supply curve with the equilibrium point of

E. The producer surplus will be the area OPE...

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