Assume the Market Depicted in the Graph Is in Equilibrium

question 81

Multiple Choice

Assume the market depicted in the graph is in equilibrium. If the market price is set to $7, which of the following statements is true?

• A)Some producers will gain surplus, but total surplus will fall.
• B)Some producers will lose surplus, but total surplus will rise.
• C)Some consumers will gain surplus, but total surplus will fall.
• D)Some consumers will lose surplus, but total surplus will rise.

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Definitions:

Unit Variable Cost

The cost of producing one unit of a product or service which varies with the level of production or sales.

Monthly Sales

The total value or volume of sales transactions that a business completes within a single month, often used to assess performance trends.

Net Operating Income

A company's income after operating expenses have been deducted but before deducting interest expenses and taxes.

Contribution Margin Ratio

The percentage of each sales dollar remaining after variable costs have been deducted, indicating how much of sales revenue is available to cover fixed costs and generate profit.