Multiple Choice
If the intended aim of the price floor set at $23, as shown in the graph, was a net increase in the well-being of producers, then positive analysis would have us consider whether:
A) the surplus transferred from producers to consumers is greater than the consumer surplus lost due to fewer transactions taking place.
B) the surplus transferred from consumers to producers is greater than the consumer surplus lost due to fewer transactions taking place.
C) the producer surplus lost due to fewer transactions taking place is greater than the producer surplus gained from a higher price.
D) the producer surplus lost due to lower prices is greater than the producer surplus lost due to fewer transactions taking place.
Correct Answer:
Verified
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