Question

When supply of a product increases, ceteris paribus, what happens to firms' willingness to produce and to the amount of producer surplus?

Answer 1

Ceteris paribus refers to nothing else changing in the situation that is being described. If the supply of a product increase the firm will produce more if there is a demand of that item, if there is a producer surplus the firm will slow down production and depending on the shelf-life, discount items to keep them moving.