Yikes! That IS a big drop. What about consumer surplus? Candace Good question! I have edited Bamboo Shoots's market here on the graph...let's take a look. Candace I have labeled the new producer surplus (PS) on the graph. Tina Wow, so what do consumers have in terms of consumer surplus after the price ceiling? In other words, what area represents consumer surplus now? Area B only Area B + Area C Area A only Area A + B
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Step 1: Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good and the actual price they pay. Show more…
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Figure 4-6 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. 25) Refer to Figure 4-6. What area represents consumer surplus after the imposition of the price floor? A) A + B + E B) A + B C) A + B + E + F D) A 26) Refer to Figure 4-6. What is the area that represents producer surplus after the imposition of the price floor? A) A + B + E B) B + E C) B + E + F D) B + C + D + E 27) Refer to Figure 4-6. What area represents consumer surplus at equilibrium? A) A + B + C + D + E B) A C) A + B + C D) A + B + E E) A + B + E + F 28) Refer to Figure 4-6. What area represents the portion of consumer surplus that has been transferred to producer surplus as a result of the price floor? A) B B) B + C C) B + E D) E 29) Refer to Figure 4-6. What area represents the deadweight loss after the imposition of the price floor? A) C + D + G B) F + G C) C + D D) C + D + F + G 30) Refer to Figure 4-6. What area represents consumer total benefit after the imposition of the price floor? A) A + B + C + D + E B) A + B + E + F C) A + B + C + D + E + F + G D) A + B + E E) B + C + E + D 31) Refer to Figure 4-6. What area represents consumer total cost after the imposition of the price floor? A) A + B + C + D + E B) A + B + E + F C) A + B + C + D + E + F + G D) B + E + F E) B + C + E + D 32) Refer to Figure 4-6. What area represents producer total benefit after the imposition of the price floor? A) A + B + C + D + E B) A + B + E + F C) A + B + C + D + E + F + G D) B + E + F E) B + C + E + D 33) Refer to Figure 4-6. What area represents the deadweight loss after the imposition of the price floor if the government decided to purchase and discard the surplus? A) C + D + G B) F + G C) C + D D) C + D + F + G E) C + D + F + G + J
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QUESTION Consumer surplus may decrease when there is an imposition of a binding price floor in the market. There is a decrease in the production cost of the good. There is an increase in the number of sellers of the good. The sellers expect the price of the good to be lower next month. QUESTION 2 Price Demand Quantity Refer to the above Figure. Assuming the price is P1, the consumer surplus would be: BDF b, BDG ABC d, FAG
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