If there is a decrease in supply (parallel shift of demand to the right),assuming a positively sloped supply curve and a negatively sloped demand curve,total surplus:
A)will increase.
B)will decrease.
C)will remain the same.
D)may change,but we can't tell how.

Question

Quizplus · Accepted Answer

If there is a decrease in supply (parallel shift of demand to the left), it will cause a decrease in the equilibrium quantity and an increase in the equilibrium price. This decrease in quantity traded will result in a reduction in consumer surplus and producer surplus, leading to a decrease in total surplus. Therefore, the correct choice is B, which states that total surplus will decrease.

If There Is a Decrease in Supply (Parallel Shift of Demand