When the market price is set above the equilibrium price:
A)efficiency does not occur.
B)total surplus is not maximized.
C)consumer surplus is decreased.
D)All of these are true.

Question

Quizplus · Accepted Answer

When the market price is set above the equilibrium price, efficiency does not occur because there is an excess supply of the good or service, leading to deadweight loss. This also means that total surplus is not maximized since some potential gains from trade are not realized. Additionally, because consumers are willing to pay less than the market price, their consumer surplus is decreased. Therefore, all of these statements are true.

When the Market Price Is Set Above the Equilibrium Price