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

question 118

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 to producer in surplus.
• B) $12 gets transferred from producer to consumer in surplus.
• C) all consumer surplus lost is gained by producers.
• D) all producer surplus lost is gained by consumers.

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Definitions:

Contribution Margin

The amount by which a product's sales price exceeds its variable costs, used to cover fixed costs and generate profit.

Variable Selling Expenses

Costs that fluctuate with the level of sales activity, such as commissions and shipping fees.

Contribution Margin

The amount remaining from sales revenue after variable expenses are subtracted, used to cover fixed costs and generate profit.

Variable Administrative Expenses

Costs that change in proportion to the activity of a business.