Figure 4-10
Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R₀.
-Refer to Figure 4-10.Suppose that instead of a price ceiling,the government imposed a price floor of R₁.What is the area representing the portion of consumer surplus transferred to producers as a result of the price floor?

Question

Figure 4-10
  Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R₀.
-Refer to Figure 4-10.Suppose that instead of a price ceiling,the government imposed a price floor of R₁.What is the area representing the portion of consumer surplus transferred to producers as a result of the price floor?

Quizplus · Accepted Answer

A price floor set above the equilibrium price results in a higher price for consumers, reducing consumer surplus. The area B represents the portion of consumer surplus that is transferred to producers due to the higher price.

Figure 4-10 Figure 4-10 Shows the Market for Apartments in Apartments