Even though the removal of price controls leads to an increase in total economic surplus,the majority of voters might not be in favour because the
A) increase in total economic surplus is too small.
B) government will be the only beneficiaries.
C) producers will always benefit more than the consumers.
D) distribution of the new surplus is not perceived as equitable.
E) increase in total economic surplus only occurs in the short run.

Question

Quizplus · Accepted Answer

The distribution of the new surplus resulting from the removal of price controls may not be perceived as fair or equitable by the majority of voters, as some groups such as producers may benefit more than others such as consumers. This perception of inequality could lead to opposition to the removal of price controls even if it results in an increase in total economic surplus.

Even Though the Removal of Price Controls Leads to an Increase