If the market for smartphones is initially in equilibrium at a price of $250 and consumption is reallocated so that Amanda,who values a phone at $300,is required to give it to Brent,who values a phone at $225,total surplus in the smartphone market will increase.

Question

Quizplus · Accepted Answer

Total surplus in the market decreases because Amanda, who values the phone more, loses it to Brent, who values it less, reducing the overall satisfaction or utility derived from the product.

If the Market for Smartphones Is Initially in Equilibrium at a Price