Assume a market that has an equilibrium price of $8.If the market price is set at $7,consumer surplus:
A) rises for some because of the decreased price.
B) decreases for some because of fewer transactions taking place.
C) Both of these statements are true.
D) Neither of these statements is true.

Question

Quizplus · Accepted Answer

When the price is set below the equilibrium price, consumer surplus increases for some consumers because they pay less than they were willing to pay. However, the lower price can also lead to a shortage, reducing the number of transactions, which can decrease consumer surplus for others.

Assume a Market That Has an Equilibrium Price of $8