Assume the Market Depicted in the Graph Is in Equilibrium

question 10

Multiple Choice

Assume the market depicted in the graph is in equilibrium at demand (D) and supply (S₁) . If the supply curve shifts to S₂, and a new equilibrium is reached, which of the following is true?

• A) Consumer surplus increases, but producer surplus decreases.
• B) Consumer surplus decreases, but producer surplus increases.
• C) Both consumer and producer surplus increase.
• D) Both consumer and producer surplus decrease.