Figure 7-7

-Refer to Figure 7-7.If price were higher than Pe,what would result
A)Total surplus would fall.
B)Consumer surplus would increase.
C)Total surplus would rise, since producer surplus would increase.
D)Consumer surplus would be greater than producer surplus.

Question

Figure 7-7
 
-Refer to Figure 7-7.If price were higher than Pe,what would result
A)Total surplus would fall. 
B)Consumer surplus would increase. 
C)Total surplus would rise, since producer surplus would increase. 
D)Consumer surplus would be greater than producer surplus.

Quizplus · Accepted Answer

If price were higher than Pe, the quantity demanded would decrease resulting in a decrease in consumer surplus. Meanwhile, the quantity supplied would increase resulting in an increase in producer surplus. However, the decrease in consumer surplus would be greater than the increase in producer surplus, leading to a decrease in total surplus.

Figure 7-7 -Refer to Figure 7-7.If Price Were Higher Than Pe,what Would