Economics.Suppose the demand for French bread rises.

Question

What happens to producer surplus in the market for French bread? What happens to producer surplus in the market for flour? illustrate your answer with diagram

Answer 1

Increase in demand will mean rightward shift of demand curve, thus equilibrium price and quantity of bread will rise consequently leading to the increase in producer surplus.

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Producer surplus before demand-shift is area of triangle below price line P1-C and above supply curve

Producer surplus after demand-shift is area of triangle below price line P2-D and above supply curve

Answer 2

How exactly would you expect somebody in this forum to insert a diagram?