Suppose a Competitive Market Is in Equilibrium at Price P

question 101

Multiple Choice

Suppose a competitive market is in equilibrium at price P' and quantity Q'. If the demand curve becomes less elastic, but the same price-quantity equilibrium is maintained, what happens to consumer and producer surplus?

• A) Both PS and CS increase.
• B) CS increases and PS decreases.
• C) CS increases and PS remains the same.
• D) Both CS and PS decrease.

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