If there is a decrease in supply, assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus:
A) will increase.
B) will decrease.
C) will remain the same.
D) may change, but we can't tell how.

Question

Quizplus · Accepted Answer

A decrease in supply will shift the supply curve to the left, causing the equilibrium price to increase and the equilibrium quantity to decrease. This will result in a decrease in total surplus, as the area below the demand curve and above the supply curve (the consumer surplus) will decrease, and the area below the supply curve and above the demand curve (the producer surplus) will also decrease.

If There Is a Decrease in Supply, Assuming a Positively