Answer to Question #134655 in Microeconomics for Wajahat

Question

Analyze the effect of the price selling in the market for wheat on equilibrium price and quantity.will consumer/ producer/ both because of this price selling? Explain using change in consumer and producers surpluses.

Answer 1

The equilibrium price for wheat refers to the exact price at which market supply is equal to the market demand. As the price of wheat rises, the consumer surplus decreases. as the price of wheat decreases, the consumer surplus increases. As the price of wheat rises, the producer surplus increases and when the price of wheat falls the producer surplus decreases.