Question

Assume short-run demand and supply curves for dry cleaning have the usual slopes, and each unit produced requires some amount of labour and exactly 1 unit of dry-cleaning fluid. What will be the short-run result of a decrease in the cost of dry-cleaning fluid?

a) increase in producer surplus and increase in consumer surplus
b) increase in producer surplus and decrease in consumer surplus
c) decrease in producer surplus and increase in consumer surplus
d) decrease in producer surplus and decrease in consumer surplus
e) producer surplus may increase or decrease while consumer surplus will increase

Answer 1

Since Jiskha doesn't have an economics expert at this time, be sure to make really good use of Khan Academy!

http://www.khanacademy.org/
Click on Subjects near the top left and then on the subject you need help with.