-Refer to the diagram above.Assume that a price floor is imposed at point V,i.e. ,the price is now represented by the distance 0V,and that the government vows to purchase any excess supply.The triangle WRP measures the
A) increased producer surplus due to the price floor.
B) loss of total economic surplus due to the price floor.
C) reduced consumer surplus due to the price floor.
D) increased total economic surplus due to the price floor.
E) increased consumer surplus due to the price floor.

Question

-Refer to the diagram above.Assume that a price floor is imposed at point V,i.e. ,the price is now represented by the distance 0V,and that the government vows to purchase any excess supply.The triangle WRP measures the
A) increased producer surplus due to the price floor. 
B) loss of total economic surplus due to the price floor. 
C) reduced consumer surplus due to the price floor. 
D) increased total economic surplus due to the price floor. 
E) increased consumer surplus due to the price floor.

Quizplus · Accepted Answer

The triangle WRP represents the deadweight loss, which is the loss of total economic surplus due to the price floor, as it measures the inefficiency created by the price floor where the quantity supplied exceeds the quantity demanded.

-Refer to the Diagram Above