Multiple Choice
When prices drop in response to a decline in demand for an increasing cost industry
A) producer surplus will increase but rents may decrease.
B) rent earned by elastically supplied inputs will decline by more than rent earned by inelastically supplied inputs.
C) rent earned by elastically supplied inputs will decline by less than rent earned by inelastically supplied inputs.
D) both producer surplus and rents will increase.
Correct Answer:
Verified
Correct Answer:
Verified
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