MICROECONOMICS
MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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Chapter 7, Problem 1QE
To determine

Explain why the combination of consumer and producer surplus  not maximized if there is excess demand or supply

Expert Solution & Answer
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Explanation of Solution

If there is either excess supply or excess demand, the number of traders will be lesser than if price were allowed to move to its equilibrium price. Thus, there is a loss of surplus in the market.

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