Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 7 - Part III - Consumers, Producers, and the Efficiency of Markets - Problems and Applications - Page 152: 3

Answer

Producer surplus increases in the market for French bread. Producer surplus increases in the market for flour.

Work Step by Step

The first graph is the market for French bread. Demand increases, so the demand curve is shifted to the right. Producer surplus increases from $C$ to $A + B + C$. The second graph is the market for flour. Flour is an input for French bread, so demand increases for flour. Due to the demand increase, the demand curve is shifted to the right. Producer surplus increases from $F$ to $D + E + F$.
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