When the market price is set above the equilibrium price:
A) the market is not efficient.
B) total surplus is not maximized.
C) consumer surplus is decreased.
D) All of these are true.

Question

Quizplus · Accepted Answer

When the market price is set above the equilibrium price, it creates an inefficient market because there is excess supply which leads to a decrease in total surplus as well as a decrease in consumer surplus. Therefore, all three options are correct.

When the Market Price Is Set Above the Equilibrium Price