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. Suppose that instead of a rent ceiling, the government imposed a price floor of $2,000 per month for apartments. What is the value of producer surplus after the imposition of the price floor?

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. Suppose that instead of a rent ceiling, the government imposed a price floor of $2,000 per month for apartments. What is the value of producer surplus after the imposition of the price floor?

Quizplus · Accepted Answer

A price floor set above the equilibrium price increases producer surplus by allowing producers to charge a higher price. The exact value of the producer surplus depends on the specific supply and demand curves, but in this scenario, the correct value is $250,000.

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