The total gains from trade (consumer surplus + producer surplus) is largest at the
Chapter 6, Problem 15(choose chapter or problem)
The total gains from trade (consumer surplus + producer surplus) is largest at the equilibrium price. What about the consumer surplus and producer surplus separately? (a) Suppose a price is artificially high. Can the consumer surplus at the artificial price be larger than the consumer surplus at the equilibrium price? What about the producer surplus? Sketch possible supply and demand curves to illustrate your answers. (b) Suppose a price is artificially low. Can the consumer surplus at the artificial price be larger than the consumer surplus at the equilibrium price? What about the producer surplus? Sketch possible supply and demand curves to illustrate your answers.
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