Question
Suppose that last year the equilibrium price and the quantity of good X were $10 and 5 million pounds. Because of strong demand this year,
Suppose that last year the equilibrium price and the quantity of goodXwere $10 and 5 million pounds. Because of strong demand this year, the equilibrium price and the quantity of goodXare $12 and 7 million pounds, respectively. Assuming that the supply curve of goodXis linear, what happened to producer surplus in the market?
AProducer surplus increased from $12.5 million to $49 million.
BProducer surplus increased from $12.5 million to $24.5 million.
CProducer surplus increased from $3 million to $7 million.
DProducer surplus increased from $4.2 million to $5.6 million.
Explain with diagram.
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