If a price below the equilibrium price is imposed in a perfectly competitive market,
A) any price reduction will increase total economic surplus.
B) any price increase will reduce total economic surplus.
C) leaving the price at this value will increase total economic surplus.
D) increasing the price to the equilibrium price will increase total economic surplus.
E) reducing the price to zero will increase total economic surplus.

Question

Quizplus · Accepted Answer

Increasing the price to the equilibrium price will eliminate the shortage and deadweight loss, thus maximizing total economic surplus.

If a Price Below the Equilibrium Price Is Imposed in a Perfectly