(Figure: Consumer and Producer Surplus) Look at the figure Consumer and Producer Surplus.If the price is held below equilibrium,producer surplus will be _ if the market were in equilibrium and total surplus will be _ if the market were in equilibrium.

A) less than;less than
B) greater than;the same as
C) less than;the same as
D) greater than;less than

Question

(Figure: Consumer and Producer Surplus) Look at the figure Consumer and Producer Surplus.If the price is held below equilibrium,producer surplus will be _____ if the market were in equilibrium and total surplus will be _____ if the market were in equilibrium.

A) less than;less than
B) greater than;the same as
C) less than;the same as
D) greater than;less than

Tanvir Singh · Accepted Answer

Final Answer : A, Explanation :  When the price is held below equilibrium, producer surplus decreases because producers receive less for each unit sold than they would at equilibrium. Total surplus also decreases because the quantity produced and consumed is less than at equilibrium, leading to inefficiencies such as unmet consumer demand or missed transactions.

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