Use the following to answer questions 20-21:
Figure 3.7
-(Figure 3.7) Suppose the government mandates a price ceiling of $8 per pound. Consumer surplus:
A) increases from $900 to $1,600.
B) increases from $400 to $1,200.
C) increases from $1,800 to $2,100.
D) decreases from $600 to $450.

Question

Use the following to answer questions 20-21:
Figure 3.7 
-(Figure 3.7) Suppose the government mandates a price ceiling of $8 per pound. Consumer surplus:
A) increases from $900 to $1,600. 
B) increases from $400 to $1,200. 
C) increases from $1,800 to $2,100. 
D) decreases from $600 to $450.

Quizplus · Accepted Answer

A price ceiling set below the equilibrium price increases consumer surplus because consumers can purchase the good at a lower price, leading to an increase in consumer surplus from $900 to $1,600.

Use the Following to Answer Questions 20-21