According to the Graph Shown,if the Market Goes from Equilibrium

question 90

Multiple Choice

According to the graph shown,if the market goes from equilibrium to having its price set at $10 then:

• A) $12 gets transferred from consumer surplus to producer surplus.
• B) area C is lost consumer surplus due to fewer transactions taking place.
• C) area E is lost producer surplus due to fewer transactions taking place.
• D) All of these are true.

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Definitions:

Efficiency Loss

The loss of economic efficiency that can occur when equilibrium for a good or a service is not achieved or is not achievable.

Deadweight Loss

Deadweight loss is an economic inefficiency resulting from a disparity between supply and demand, often caused by market interventions like taxes or price controls, resulting in potential benefits not realized by any party.

Tax Revenue

The total amount of money collected by the government from taxes, which is then used for public expenditures.