Figure 4-8 shows the market for apartments in Springfield.Recently,the government imposed a rent ceiling of $1,000 per month.
-Refer to Figure 4-8.What is the value of producer surplus after the imposition of the ceiling?

Question

Quizplus · Accepted Answer

Producer surplus is the area above the supply curve and below the price line. After the imposition of the ceiling, the price line falls to the level of the ceiling price, and the producer surplus is reduced to the area above the supply curve and below the ceiling price line. This area is equal to $40,000.

Figure 4-8 Shows the Market for Apartments in Springfield