If a price ceiling of $8 were placed in the market in the graph shown:

Question

Quizplus · Accepted Answer

With a price ceiling of $8, the maximum price that the producer can charge is $8. This will result in a decrease in the producer surplus as they are unable to charge the market equilibrium price. On the other hand, consumers will benefit from the price ceiling as they will be able to purchase the good at a lower price than the equilibrium price, resulting in an increase in consumer surplus. Therefore, the surplus is transferred from producers to consumers.

If a Price Ceiling of $8 Were Placed in the Market