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Figure: Consumer and Producer Surplus
-(Figure: Consumer and Producer Surplus) Look at the figure Consumer and Producer Surplus. If the price is held above equilibrium, consumer surplus _____ and total surplus _____.
A) increases; decreases
B) decreases; stays the same
C) increases; stays the same
D) decreases; decreases

Question

Use the following to answer questions:
Figure: Consumer and Producer Surplus 
-(Figure: Consumer and Producer Surplus) Look at the figure Consumer and Producer Surplus. If the price is held above equilibrium, consumer surplus _____ and total surplus _____.
A) increases; decreases 
B) decreases; stays the same 
C) increases; stays the same 
D) decreases; decreases

Quizplus · Accepted Answer

When the price is held above equilibrium, consumer surplus decreases because consumers are paying a higher price and buying less quantity. Total surplus decreases because the market is not operating efficiently, leading to a deadweight loss.

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