Use the following to answer question:
Figure: Quantity Controls
-(Figure: Quantity Controls) Look at the figure Quantity Controls. If the government decides to restrict the quantity sold to 100, which of the following is FALSE?
A) Total surplus will fall by areas C and E.
B) The market is not at equilibrium.
C) Consumer surplus is maximized.
D) Mutually beneficial transactions have been missed.

Question

Use the following to answer question:
Figure: Quantity Controls 
-(Figure: Quantity Controls) Look at the figure Quantity Controls. If the government decides to restrict the quantity sold to 100, which of the following is FALSE?
A) Total surplus will fall by areas C and E. 
B) The market is not at equilibrium. 
C) Consumer surplus is maximized. 
D) Mutually beneficial transactions have been missed.

Quizplus · Accepted Answer

Consumer surplus is not maximized when the quantity is restricted to 100, as the market is not at equilibrium and mutually beneficial transactions are missed.

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