If the price is below the equilibrium price in the market for grapefruit, total surplus:
A)will increase.
B)will decrease.
C)will not change.
D)may change, but we cannot determine the change without more information.

Question

Quizplus · Accepted Answer

If the price is below the equilibrium price, there will be excess demand for grapefruit. This will lead to a decrease in total surplus as some consumers who are willing to pay more for grapefruit will be unable to buy it, and some producers who are willing to sell at a higher price will not be able to do so. This results in a deadweight loss and decreases the overall efficiency of the market.

If the Price Is Below the Equilibrium Price in the Market