Assume competitive markets (price are given) and that the supply is more inelastic than demand. Which of the following statements is correct? A. Consumer surplus will be larger than producer surplus. B. Consumer surplus will be exactly the same as producer surplus. C. We do not have sufficient information to infer which surplus is greater. D. Consumer surplus will be smaller than producer surplus.

Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter3: Demand, Supply, And The Market Proces
Section: Chapter Questions
Problem 6CQ
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Assume competitive markets (price are given)
and that the supply is more inelastic than
demand. Which of the following statements is
correct?
A. Consumer surplus will be larger than
producer surplus.
B. Consumer surplus will be exactly the same as
producer surplus.
C. We do not have sufficient information to infer
which surplus is greater.
D. Consumer surplus will be smaller than
producer surplus.
Transcribed Image Text:Assume competitive markets (price are given) and that the supply is more inelastic than demand. Which of the following statements is correct? A. Consumer surplus will be larger than producer surplus. B. Consumer surplus will be exactly the same as producer surplus. C. We do not have sufficient information to infer which surplus is greater. D. Consumer surplus will be smaller than producer surplus.
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