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Suppose a Competitive Market Is in Equilibrium at Price P

Question 101

Multiple Choice

Suppose a competitive market is in equilibrium at price P' and quantity Q'. If the demand curve becomes less elastic, but the same price-quantity equilibrium is maintained, what happens to consumer and producer surplus?


A) Both PS and CS increase.
B) CS increases and PS decreases.
C) CS increases and PS remains the same.
D) Both CS and PS decrease.

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