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The correct response is b. Producer surplus falls but consumer surplus rises. A monopolist produces at a level that maximizes profits. If the monopolist offers another output unit for sale: Producer surplus falls but consumer surplus rises.
The whole amount that a producer makes when they create and sell a certain amount of an item at the going rate is known as the producer surplus. The producer surplus is equal to the entire revenue from sales of a producer's goods minus the marginal cost of production. The amount that producers might make by selling more of their goods can be calculated using their producer surplus. For instance, if a product's market price is $50 and customers pay $100 for it, the corporation may have the extra money to produce more of that product and make a profit. A supply curve results from plotting the marginal cost of manufacturing on a graph. The direct costs of production are shown by the area under the supply curve. The net benefit to the seller, or producer surplus, is indicated by the region above the supply curve.
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