According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:
A) area (B +
C) gets transferred from consumer to producer.
B) area (B +
C) gets transferred from producer to consumer.
C) area B gets transferred from consumer to producer.
D) area B gets transferred from producer to consumer.

Question

According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:
A) area (B + 
C) gets transferred from consumer to producer. 
B) area (B + 
C) gets transferred from producer to consumer. 
C) area B gets transferred from consumer to producer. 
D) area B gets transferred from producer to consumer.

Quizplus · Accepted Answer

The area B represents the consumer surplus before the change in price. If the price increases to $10, the consumer surplus will decrease and some of it will be transferred to the producers. Therefore, the area B will be transferred from the consumer to the producer. The area C represents the producer surplus before the change in price. It will remain with the producers after the price change. Therefore, the correct choice is C.

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