Assume a Market Has an Equilibrium Price of $4

question 69

Multiple Choice

Assume a market has an equilibrium price of $4. If the market price is set at $8, which of the following statements is true?

• A) Some surplus is transferred from consumers to producers, but total surplus falls.
• B) All surplus is transferred from consumers to producers, and total surplus stays the same.
• C) Some surplus is transferred from producers to consumers, but total surplus falls.
• D) Some surplus is transferred from consumers to producers, causing total surplus to increase.

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Definitions:

Corporation

A legal entity recognized by law as distinct from its owners that can own property, incur debts, sue, or be sued.

Partnership Income

The share of earnings distributed to the partners of a business, reflecting their individual stakes in the partnership’s profits.

Capital Balance

The amount of money that owners have invested in a company that has not been repaid or withdrawn.

Manager-Managed

A management structure in which a company is overseen by professional managers rather than its owners or members.