When the market price is set above the equilibrium price:
A) total surplus increases.
B) consumer surplus increases for some consumers but falls for others.
C) there are no exchanges that can make some better off without others becoming worse off.
D) the market is not efficient.

Question

Quizplus · Accepted Answer

When the market price is set above the equilibrium price, it means that there is an excess supply of goods or services. This leads to a situation where some buyers are willing to purchase the good or service at the higher price, but there are not enough sellers to meet the demand. Therefore, some buyers will be willing to pay more while some sellers will receive more than the equilibrium price. This results in an inefficient market as the market is not clearing, and there are potential gains from trade that are not being realized.

When the Market Price Is Set Above the Equilibrium Price