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 price shifts from the equilibrium point of $8 to $10, it means that some consumers are now willing to pay more than they were previously, resulting in a transfer of surplus from consumers to producers (answer A). Additionally, the price increase may lead to a decrease in the quantity demanded, resulting in a loss of consumer surplus in area C (answer B). Finally, a decrease in the quantity supplied (due to the higher price) may lead to a loss of producer surplus in area E (answer C). Therefore, all three statements are true.

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