Assume the market was in equilibrium in the graph shown. If the market price were set to $6, which of the following is true?
A) For those still interacting in the market, some surplus is transferred from buyer to seller.
B) For those still interacting in the market, some surplus is transferred from seller to buyer.
C) Producers gain the surplus of those buyers who dropped out of the market.
D) Consumers gain the surplus of those sellers who dropped out of the market.

Question

Assume the market was in equilibrium in the graph shown. If the market price were set to $6, which of the following is true?
A) For those still interacting in the market, some surplus is transferred from buyer to seller. 
B) For those still interacting in the market, some surplus is transferred from seller to buyer. 
C) Producers gain the surplus of those buyers who dropped out of the market. 
D) Consumers gain the surplus of those sellers who dropped out of the market.

Quizplus · Accepted Answer

If the market price were set to $6, it would be above the equilibrium price of $4. This means that there would be a surplus of sellers, and some of them would be willing to sell at the higher price. However, some buyers would no longer be willing to buy at this higher price, so there would be a decrease in the quantity demanded. As a result, some surplus would be transferred from seller to buyer for those still interacting in the market.

Assume the Market Was in Equilibrium in the Graph Shown