Under a binding price ceiling, what does the change in consumer surplus represent?
A) The gain in surplus for those buyers who can still purchase the product at the lower price.
B) The loss in surplus for those buyers who previously purchased some units of the good at the higher price, but these units are no longer produced at the lower price.
C) The loss in surplus for those buyers who would like the purchase the excess demand created by the price ceiling policy.
D) Both A and B are correct.
E) Both A and C are correct.

Question

Quizplus · Accepted Answer

A binding price ceiling results in a lower price, benefiting consumers who can still purchase the product (A), but it also leads to a shortage, causing a loss for those who can't buy the product anymore (B).

Under a Binding Price Ceiling, What Does the Change in Consumer