If a perfectly competitive market is in equilibrium and then market demand increases,which of the following would happen?
A)producer surplus would definitely increase and consumer surplus may increase or decrease
B)producer surplus would definitely decrease and consumer surplus may increase or decrease
C)consumer surplus would definitely decrease and producer surplus may increase or decrease
D)consumer surplus would definitely increase and producer surplus may increase or decrease
E)producer and consumer surplus would remain unchanged

Question

Quizplus · Accepted Answer

In a perfectly competitive market, an increase in demand leads to a higher equilibrium price and quantity. Producer surplus increases as producers can sell more at a higher price. Consumer surplus may increase or decrease depending on the relative changes in price and quantity.

If a Perfectly Competitive Market Is in Equilibrium and Then