If a price floor is set at $23 in the market shown in the graph, which area(s) would represent total surplus?

Question

Quizplus · Accepted Answer

Total surplus is the sum of consumer surplus and producer surplus. In this case, if a price floor is set at $23, it results in a surplus for producers (represented by area A) but a loss of consumer surplus (represented by area C). Area B is the deadweight loss due to the market inefficiency caused by the price floor. Therefore, the sum of areas A and B does not represent total surplus. Area E represents the consumer surplus that still exists above the price floor, and area F represents the increased producer surplus due to the price floor. The sum of areas A, B, E represents the total surplus in this scenario.

If a Price Floor Is Set at $23 in the Market