For markets operating at quantities lower than the equilibrium price and quantity for a perfectly competitive market:
A)the outcome is efficient.
B)total surplus is increased.
C)consumer surplus is always increased.
D)None of these statements is true.

Question

Quizplus · Accepted Answer

Markets operating at quantities lower than the equilibrium price and quantity for a perfectly competitive market do not result in an efficient outcome, as there is deadweight loss due to transactions that do not take place. Total surplus is also not increased, and while some individual buyers may experience an increase in consumer surplus, some sellers may experience a decrease in producer surplus. Therefore, none of the given statements are true.

For Markets Operating at Quantities Lower Than the Equilibrium Price