Suppose a perfectly competitive market is in equilibrium,and then market supply 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 supply leads to a lower equilibrium price and higher equilibrium quantity. This increases consumer surplus as consumers pay less and can buy more. Producer surplus may increase or decrease depending on the cost structure of the producers.

Suppose a Perfectly Competitive Market Is in Equilibrium,and Then Market