Figure 4-8 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

Figure 4-8  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?

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 shifts down, reducing the area of producer surplus. The new producer surplus is the area above the supply curve and below the ceiling price line, which is $50,000.

Figure 4-8 Figure 4-8 Shows the Market for Apartments