-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 area that results from calculating (Q2ECQ1)- (Q2FCQ1)represents the
A) change in consumer surplus due to the price ceiling.
B) new consumer surplus after the price ceiling is imposed.
C) change in producer surplus due to the price ceiling.
D) new producer surplus after the price ceiling is imposed.
E) loss of total economic 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 area that results from calculating (Q2ECQ1)- (Q2FCQ1)represents the
A) change in consumer surplus due to the price ceiling. 
B) new consumer surplus after the price ceiling is imposed. 
C) change in producer surplus due to the price ceiling. 
D) new producer surplus after the price ceiling is imposed. 
E) loss of total economic surplus due to the price ceiling.

Quizplus · Accepted Answer

The area that results from calculating (Q2ECQ1)- (Q2FCQ1) represents the loss of total economic surplus due to the price ceiling. This is because the area Q2ECQ1 represents the consumer surplus that is lost due to the price ceiling, and the area Q2FCQ1 represents the producer surplus that is lost due to the price ceiling.

-Refer to the Diagram Above