Figure 4-10
Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R₀.
-Refer to Figure 4-10.Suppose that instead of a price ceiling,the government imposed a price floor of R₁.What is the area representing producer surplus after the imposition of the price floor?

Question

Figure 4-10
  Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R₀.
-Refer to Figure 4-10.Suppose that instead of a price ceiling,the government imposed a price floor of R₁.What is the area representing producer surplus after the imposition of the price floor?

Quizplus · Accepted Answer

The area representing producer surplus after the imposition of the price floor is B. This is because the price floor sets a minimum price that producers can sell their goods for, which means that they will receive a higher price for their goods than they would if there were no price floor. The area B represents the difference between the price that producers receive under the price floor and the price that they would receive in a free market.

Figure 4-10 Figure 4-10 Shows the Market for Apartments in Apartments