Question

Suppose the demand for bread rises. What happens to producer surplus in the market for bread? What happens to producer surplus in the market for flour (an ingredient for making bread)? Use diagram to explain.

Answer 1

Answer:

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Explanation:

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Answer 2

What happens to producer surplus in the market for bread? What happens to producer surplus in the market for flour?

Explanation:

In the market of bread and flour the producer surplus will increase because

• Producer surplus is the amount sellers receive for their production costs.
• Producer surplus is E1. New producer surplus is E2
• For Bread market the demand increases with which the demand (d1) will increase to d2. and the surplus will increase from E1 to E2.
• For Flour market the demand will also increase because this is the ingredient used to make bread so the demand for flour will increase from D1 to D2. And the surplus will increase from E1 to E2.