If the price is above the equilibrium price in the market for grapefruit,assuming a positively sloped supply curve and a negatively sloped demand curve,total surplus:
A)will be greater than if price were at equilibrium.
B)will be less than if price were at equilibrium.
C)will be the same as if price were at equilibrium.
D)may be different than if price were at equilibrium,but we cannot determine this without more information.

Question

Quizplus · Accepted Answer

If the price is above the equilibrium price, it means that quantity supplied exceeds quantity demanded. As a result, there will be a surplus of grapefruit in the market, and producers will lower the price to sell their excess supply. This will decrease total surplus, as consumers will pay less but producers will earn less as well. Therefore, total surplus will be less than if price were at equilibrium.

If the Price Is Above the Equilibrium Price in the Market