Suppose That the Equilibrium Price in the Market for Widgets

question 15

Multiple Choice

Suppose that the equilibrium price in the market for widgets is $5.If a law increased the minimum legal price for widgets to $6,

• A)the resulting increase in consumer surplus would be larger than any possible loss of producer surplus.
• B)the resulting increase in consumer surplus would be smaller than any possible loss of producer surplus.
• C)any possible increase in producer surplus would be larger than the loss of consumer surplus.
• D)any possible increase in producer surplus would be smaller than the loss of consumer surplus.

---

Definitions:

Quantity Demanded

The amount of a good that buyers are willing and able to purchase at a specific price.

Quantity Demanded

The overall volume of a commodity or service that consumers are ready and able to buy at a certain price within a market.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price over a specific period of time.

Equilibrium Price

The Equilibrium Price is the market price at which the quantity of goods supplied is equal to the quantity of goods demanded.