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Suppose the equilibrium price for bicycle tires is $42 but the market price falls to $37. Jerry is still able to make a profit at
Suppose the equilibrium price for bicycle tires is $42 but the market price falls to $37. Jerry is still able to make a profit at this lower price, so he stays in business. Anat, who was able to make a small profit by selling tires at $42, goes out of business as prices fall. Madison bought the tires at the higher price from Anat and is delighted to buy them at a lower price from Jerry. Marcus, who previously did not purchase tires, is willing to pay the lower price, so he buys new tires from Jerry. Which individual's situation contributes to a reduction in total surplus
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