Figure 9.4
-Refer to Figure 9.4. If the government establishes a price floor of $40 and government purchases the surplus over quantity demanded, producer surplus will

Question

Quizplus · Accepted Answer

A price floor set above the equilibrium price increases producer surplus because producers receive a higher price for their goods. If the government purchases the surplus, producers sell more at the higher price, increasing their surplus by $500.

Figure 9.4 -Refer to Figure 9.4. If the Government Establishes a Price