If a price ceiling is imposed on a rental market for apartments,the more elastic the supply of apartments,the
A) smaller the loss in total economic surplus.
B) larger the loss in total economic surplus.
C) smaller the gain in total economic surplus.
D) larger the gain in total economic surplus.
E) greater the redistributed surplus.

Question

Quizplus · Accepted Answer

When a price ceiling is imposed on the rental market for apartments, the more elastic the supply of apartments, the larger the loss in total economic surplus. This is because a more elastic supply means that producers can more easily adjust to the lower prices, resulting in a greater decrease in the quantity supplied. As a result, there will be a shortage, which leads to a reduction in the quantity demanded, reducing the overall economic surplus. Therefore, the more elastic the supply, the greater the loss in total economic surplus.

If a Price Ceiling Is Imposed on a Rental Market