Assume a market that has an equilibrium price of $5.If the market price is set at $9,producer surplus:
A)rises for some because of the increased price.
B)decreases for some because of fewer transactions taking place.
C)Both of these statements are true.
D)Neither of these statements is true.

Question

Quizplus · Accepted Answer

When the market price is set above the equilibrium price, producer surplus increases for those who can still sell their goods at the higher price, but it decreases for others due to a reduction in the quantity sold, as fewer consumers are willing to buy at the higher price.

Assume a Market That Has an Equilibrium Price of $5