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:

Floating Rate Debt

A type of debt instrument with a variable interest rate that adjusts periodically based on a benchmark interest rate or index.

Risk-Free Rates

The theoretical rate of return of an investment with no risk of financial loss, typically represented by the yield on government securities.

Arbitrage Opportunities

Situations where a security or asset is simultaneously priced differently in two or more markets, allowing for risk-free profit through simultaneous buying and selling.

Spot Exchange Rate

The existing rate for the instant exchange of one currency for another.