Table 7-4

-Refer to Table 7-4.At a price of $6,how large would total surplus be
A)more than it would be at the equilibrium price
B)less than it would be at the equilibrium price
C)more than it could be when price is $9
D)less than it could be when price is $3

Question

Table 7-4
 
-Refer to Table 7-4.At a price of $6,how large would total surplus be
A)more than it would be at the equilibrium price 
B)less than it would be at the equilibrium price 
C)more than it could be when price is $9 
D)less than it could be when price is $3

Quizplus · Accepted Answer

At a price of $6, the quantity demanded would be 12 units and the quantity supplied would be 8 units, resulting in a shortage of 4 units. This means that the market is not in equilibrium and there is deadweight loss, which reduces total surplus. Thus, total surplus would be less than it would be at the equilibrium price. At the equilibrium price of $8, total surplus is maximized. Therefore, total surplus would also be less than it could be when the price is $9. Finally, at a price of $3, the quantity supplied would be 6 units and quantity demanded would be 14 units, resulting in a surplus of 8 units. This means that there is also deadweight loss at this price, reducing total surplus. Hence, the total surplus would be more than it could be when the price is $3.

Table 7-4 -Refer to Table 7-4.At a Price of $6,how Large Would