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:

Interest Groups

Organizations that attempt to influence public policy and government decisions to benefit their members or causes they support.

Tyranny of the Majority

A situation in a democratic setting where decisions made by a majority place its interests above those of an individual or minority group, potentially leading to oppression.

PACs

Short for Political Action Committees, these are organizations that raise money privately to influence elections or legislation, especially at the federal level.

United States

A federal republic in North America, composed of 50 states, a federal district, and other territories.