The graph illustrates how the quantity of a particular product that is

Question

https://gmatclub.com/forum/download/file.php?mode=view&id=66240 The graph illustrates how the quantity of a particular product that is supplied and demanded changes in response to changes in price. The equilibrium point is the price and quantity at which the production and consumption of that product will remain stable. Since both producer and consumer benefit from a transaction, either getting product value or profits, each earns "surplus" value. Use the dropdown menus to complete the statement accurately, using the information provided in the diagram. If the population were to increase, raising the demand curve higher (but not changing its shape), the consumer surpluses would GRAPH_1_PLACEHOLDER , and the producer surplus would GRAPH_2_PLACEHOLDER . Graphics.png

oz17 · Answer

Producer surplus will increase because both quantity supplied and price increase, on the other hand effect on consumer surplus can go in either direction since quantity increases but also price in the same price increases, then to answer the question we should look at the slope of supply curve, which is positive but not very steep indicating that for unit increase in quantity price will increase relatively less, leading us to conclude that consumer surplus will increase.

SatvikVedala · Answer

To check the answer please draw a line above the current equilibrium line (from Y axis). See where exactly it is intersecting the supply curve.

Since we are shifting the demand curve to higher values, the equilibrium line shifts as well.

This gives you the understanding

-it's Satvik-

ARYAKASHANDILYA · Answer

But How can we say, that in both the cases it increases , it can increase in one and decrease in other too

Jxmes · Answer

focus on the horizontal component and notice that it increases for both, so both will increase as the shape of the demand curve does not change

Nipunh · Answer

Experts' Global Video Explanation:

https://www.youtube.com/watch?v=uHdLBsQw-Ro

crimson_noise · Answer

Both consumer and supplier surplus increases.

Explanation:
An increase in population shifts the demand curve up/right while keeping its shape, moving the market to a new equilibrium with a higher price and a larger quantity than before, as the intersection with the upward‐sloping supply curve occurs further up and to the right.
Consumer surplus is the area under the demand curve and above the market price; after the outward shift, this area becomes both wider (more units sold) and, despite the higher price, taller at many quantities because willingness to pay is higher at each quantity, so the total shaded consumer‐surplus area expands.
Producer surplus is the area above the supply curve and below the market price; the rise in price and increase in quantity together enlarge this region, so producer surplus also rises.

The graph illustrates how the quantity of a particular product that is

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The graph illustrates how the quantity of a particular product that is

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