According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:
A) area (C +
E) is deadweight loss.
B) area B is transferred surplus from consumers to producers.
C) $12 of surplus gets transferred from consumers to producers.
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) area (C + 
E) is deadweight loss. 
B) area B is transferred surplus from consumers to producers. 
C) $12 of surplus gets transferred from consumers to producers. 
D) All of these are true.

Quizplus · Accepted Answer

If the market moves from equilibrium to a price of $10, there will be a deadweight loss represented by area (C + E), as some trades that were previously mutually beneficial will no longer occur. Additionally, there is a transfer of surplus from consumers to producers represented by area B, as the producers now receive more money for their goods while consumers pay a higher price. This transfer of surplus amounts to $12, as it is the difference between the consumer surplus at the initial equilibrium price ($24) and the new consumer surplus at a price of $10 ($12). Therefore, all of the statements are true.

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