-Refer to Exhibit 4-8.Suppose that wheat producers lobby the government for a price floor and receive one.This price floor is set at P_F.What is the change in the total surplus at the price floor,compared to at the equilibrium price? A) There was a gain in total surplus equal to (area 1 + 2 + 3) B) There was a gain in total surplus equal to (area 1 + 2 + 3 + 4 + 5) C) There was a loss in total surplus equal to (area 4 + 5) D) There was a loss in total surplus equal to (area 4 + 5 + 6 )

Question

Quizplus · Accepted Answer

The loss in total surplus is equal to the sum of areas 4 and 5, which represent the deadweight loss and the loss to consumers, respectively.