(Figure: Determining Surplus and Loss) Consider the graph. If the price is raised from $8 to $12, a surplus of

Question

Quizplus · Accepted Answer

At a price of $8, the quantity supplied is greater than the quantity demanded, resulting in a surplus of 140 units. If the price is raised to $12, the quantity supplied decreases while the quantity demanded increases, resulting in a new equilibrium with a surplus of only 60 units. The area shaded in red represents the losses incurred by producers due to the reduction in quantity supplied. The area shaded in green represents the gains for consumers due to the reduction in price. Overall, the consumer surplus increases by $80, which is transferred from producers to consumers. Therefore, the correct answer is B.

(Figure: Determining Surplus and Loss) Consider the Graph