According to the graph shown,if the market goes from equilibrium to having its price set at $10:
A) deadweight loss will occur.
B) seven fewer units will be exchanged.
C) consumer surplus will decrease.
D) All of these are true.

Question

According to the graph shown,if the market goes from equilibrium to having its price set at $10:
A) deadweight loss will occur. 
B) seven fewer units will be exchanged. 
C) consumer surplus will decrease. 
D) All of these are true.

Quizplus · Accepted Answer

If the market goes from equilibrium to having its price set at $10, there will be a deadweight loss because the quantity demanded will decrease and quantity supplied will increase, meaning that there will be a surplus. Additionally, seven fewer units will be exchanged as the quantity demanded will decrease from 12 units to 5 units. This will also lead to a decrease in consumer surplus as consumers will have to pay a higher price for the product. Therefore, all of these statements are true.

According to the Graph Shown,if the Market Goes from Equilibrium