Figure 7-15

-Refer to Figure 7-15.If the government imposes a price floor of $60 in this market,then total surplus will be
A) higher by $57.50 than it would be without the price floor.
B) lower by $20.00 than it would be without the price floor.
C) lower by $45.00 than it would be without the price floor.
D) lower by $62.50 than it would be without the price floor.

Question

Figure 7-15
 
-Refer to Figure 7-15.If the government imposes a price floor of $60 in this market,then total surplus will be
A) higher by $57.50 than it would be without the price floor. 
B) lower by $20.00 than it would be without the price floor. 
C) lower by $45.00 than it would be without the price floor. 
D) lower by $62.50 than it would be without the price floor.

Quizplus · Accepted Answer

A price floor set above the equilibrium price leads to a surplus of goods, reducing total surplus due to inefficient allocation and wasted resources. The loss in total surplus is calculated as the difference between the consumer and producer surplus lost due to the price floor, which is $62.50.

Figure 7-15 -Refer to Figure 7-15.If the Government Imposes a Price Floor