Figure 9.3
-Refer to Figure 9.3. If the government establishes a price ceiling of $1.00, producer surplus will

Question

Quizplus · Accepted Answer

With a price ceiling of $1.00, the market price will be below the equilibrium price, causing a shortage. This will decrease the quantity supplied by producers and cause a decrease in producer surplus. In this case, producer surplus will fall by the difference between the original producer surplus (represented by the triangle above the $1.00 price ceiling) and the new producer surplus (represented by the rectangle below the $1.00 price ceiling). This difference is $300, so producer surplus will fall by $300. Therefore, the correct answer is B.

Figure 9.3 -Refer to Figure 9.3. If the Government Establishes a Price