-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 size of the total surplus at P_F? A) area 1 + 2 + 3 B) area 1 + 2 + 3 + 4 C) area 1 + 2 + 3 + 4 + 5 D) area 1 + 2 + 3 + 4 + 5 + 6

Question

Quizplus · Accepted Answer

A price floor set above the equilibrium price results in a surplus, reducing total surplus to the sum of consumer and producer surplus, which is area 1 + 2 + 3.