Use the following to answer questions 29-31:
Figure 3.10
-(Figure 3.10) If the government mandates a price floor of $750, the area of producer surplus changes from:
A) D + E + F to B + D + F.
B) F to B + C + D + F.
C) D + E + F to A + B + D + F.
D) B + C + D + F to B + D + F.

Question

Use the following to answer questions 29-31:
Figure 3.10 
-(Figure 3.10) If the government mandates a price floor of $750, the area of producer surplus changes from:
A) D + E + F to B + D + F. 
B) F to B + C + D + F. 
C) D + E + F to A + B + D + F. 
D) B + C + D + F to B + D + F.

Quizplus · Accepted Answer

A price floor set above the equilibrium price increases producer surplus by adding area B, but area E is lost due to decreased quantity sold.

Use the Following to Answer Questions 29-31