$$\begin{array} { | c | c | c | }
\hline \text { Producer } & \begin{array} { c }
\text { Minimum } \
\text { Acceptable Price }
\end{array} & \begin{array} { c }
\text { Actual Price } \
\text { (Equilibrium Price) }
\end{array} \
\hline A & \$ 6 & \$ 13 \
\hline B & 7 & 13 \
\hline C & 9 & 13 \
\hline D & 11 & 13 \
\hline
\end{array}$$ Refer to the provided table. If the equilibrium price increases, then the
A) producer surplus will decrease.
B) consumer surplus will increase.
C) producer surplus will increase.
D) allocative e?ciency will increase.

Question

$$\begin{array} { | c | c | c | } 
\hline \text { Producer } & \begin{array} { c } 
\text { Minimum } \
\text { Acceptable Price }
\end{array} & \begin{array} { c } 
\text { Actual Price } \
\text { (Equilibrium Price) }
\end{array} \
\hline A & \$ 6 & \$ 13 \
\hline B & 7 & 13 \
\hline C & 9 & 13 \
\hline D & 11 & 13 \
\hline
\end{array}$$ Refer to the provided table. If the equilibrium price increases, then the
A) producer surplus will decrease.
B) consumer surplus will increase.
C) producer surplus will increase.
D) allocative e?ciency will increase.

Quizplus · Accepted Answer

When the equilibrium price increases, the producer surplus will increase because the actual price is higher than the minimum acceptable price. The consumer surplus will decrease because they have to pay a higher price for the product. Allocative efficiency may or may not increase as it depends on whether the increased price reflects the true cost of producing the product. However, the table does not provide enough information to determine whether allocative efficiency has increased or not.

Refer to the Provided Table