According to the graph shown,if the market goes from equilibrium to having its price set at $10 then:
A) $12 gets transferred from consumer surplus to producer surplus.
B) area C is lost consumer surplus due to fewer transactions taking place.
C) area E is lost producer surplus due to fewer transactions taking place.
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 then:
A) $12 gets transferred from consumer surplus to producer surplus. 
B) area C is lost consumer surplus due to fewer transactions taking place. 
C) area E is lost producer surplus due to fewer transactions taking place. 
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 transfer of surplus from consumers to producers, which is represented by area A. This means that $12 (represented by area B) gets transferred from consumer surplus to producer surplus, fulfilling option A. Additionally, due to the higher price, there will be fewer transactions taking place, represented by a loss of consumer surplus in area C, fulfilling option B. There will also be a loss of producer surplus in area E due to fewer transactions taking place, fulfilling option C. Therefore, all of these statements are true, and the correct answer is D.

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