After a price ceiling is imposed,total economic surplus in that market will
A) increase.
B) remain unchanged.
C) decrease.
D) be reallocated from consumers to producers.
E) increase or decrease,depending on the price elasticity of demand.

Question

Quizplus · Accepted Answer

When a price ceiling is imposed, the price of the good cannot exceed a certain level. This often results in a shortage of the good because the quantity demanded exceeds the quantity supplied at the lower price. As a result, consumers may not be able to purchase the quantity they desire, and producers may not be able to sell the quantity they desire. This reduction in quantity traded can cause a decrease in total economic surplus, as some individuals who valued the good more than its cost were unable to purchase it due to the price ceiling. Thus, total economic surplus in the market will decrease.

After a Price Ceiling Is Imposed,total Economic Surplus in That