According to the graph shown,if the market goes from equilibrium to having its price set at $10 then:
A) the market ceases to be efficient.
B) total surplus will decline.
C) deadweight loss will occur.
D) All of these are true.

Question

According to the graph shown,if the market goes from equilibrium to having its price set at $10 then:
A) the market ceases to be efficient. 
B) total surplus will decline. 
C) deadweight loss will occur. 
D) All of these are true.

Quizplus · Accepted Answer

If the market goes from equilibrium to having its price set at $10, the market will no longer be efficient as there will be a surplus of goods (quantity supplied exceeds quantity demanded) and some potential buyers will be left unsatisfied. This will cause a decline in total surplus, as some consumers who were willing to buy at the original price will no longer find it worth it to buy at the new, higher price. Additionally, there will be deadweight loss as some gains from trade will be forgone, leading to a net loss in social welfare. Therefore, all of the options are true.

According to the Graph Shown,if the Market Goes from Equilibrium