Question

Compare a market operating at a quantity lower than equilibrium with the same market operating at the equilibrium quantity. Which of the following statements are true? a. A market operating below equilibrium will transfer some producer surplus to consumers. b. A market operating below equilibrium will transfer some consumer surplus to producers. c. It is unclear if the consumer surplus is greater or less at the market operating below equilibrium.

Answer 1

b. A market operating below equilibrium will transfer some consumer surplus to producers.