Assume a Market Has an Equilibrium Price of $7

question 24

Multiple Choice

Assume a market has an equilibrium price of $7. If the market price is set at $3, 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 producers to consumers, 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:

Offer

A proposal presented by one party to another with the intention to create a legal agreement upon acceptance.

Offer

A proposal presented by one party to another as a basis for negotiations or the formation of a contract.

Mailbox Rule

A legal principle that deems an offer accepted once the acceptance has been communicated, even if it has not yet been received by the offeror.

Letter Of Revocation

A formal document that annuls, withdraws, or cancels a previously granted power or authority.