If the price is below 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

When the price is below the equilibrium price, there is a shortage of goods because the quantity demanded exceeds the quantity supplied. This situation leads to a decrease in total surplus because some of the willingness to pay by consumers is not met, and some of the willingness to sell by producers is not utilized, compared to the equilibrium where supply equals demand.

If the Price Is Below the Equilibrium Price in the Market