If price is increased by law from a market equilibrium value of $5 to a higher value of $6:
A) both producer surplus and consumer surplus will increase.
B) consumer surplus will decrease and there will be some lost surplus.
C) producer surplus will decrease and there will be some lost surplus.
D) there will be lost surplus, as both producer surplus and consumer surplus decrease.

Question

Quizplus · Accepted Answer

When the price is increased above the equilibrium, consumer surplus decreases because consumers pay more for the same quantity, and there is a deadweight loss due to the reduction in quantity traded, leading to lost surplus.

If Price Is Increased by Law from a Market Equilibrium