Assume the Market Is in Equilibrium in the Graph Shown

question 100

Multiple Choice

Assume the market is in equilibrium in the graph shown at demand D and supply S₁. If the supply curve shifts to S₂, and a new equilibrium is reached, which of the following is true?

• A) Consumer surplus increases, but producer surplus decreases.
• B) Consumer surplus decreases, but producer surplus increases.
• C) Both consumer and producer surplus increase.
• D) Both consumer and producer surplus decrease.