-Refer to the diagram above.Assume that a price ceiling is imposed at point G,i.e. ,the price is now represented by the distance 0G.The reduction in quantity supplied from Q1 to Q2 represents
A) a reduction in the demand for the good.
B) the goal of the price ceiling: reduced production.
C) production that was available in an unregulated market,but is no longer available after the price ceiling is introduced.
D) reduced producer surplus due to the price ceiling.
E) increased consumer surplus due to the price ceiling.

Question

-Refer to the diagram above.Assume that a price ceiling is imposed at point G,i.e. ,the price is now represented by the distance 0G.The reduction in quantity supplied from Q1 to Q2 represents
A) a reduction in the demand for the good. 
B) the goal of the price ceiling: reduced production. 
C) production that was available in an unregulated market,but is no longer available after the price ceiling is introduced. 
D) reduced producer surplus due to the price ceiling. 
E) increased consumer surplus due to the price ceiling.

Quizplus · Accepted Answer

The reduction in quantity supplied from Q1 to Q2 represents production that was available in an unregulated market but is no longer available after the price ceiling is introduced, as suppliers are less willing to supply at the lower price.

-Refer to the Diagram Above