-The above figure shows supply and demand curves for apartment units in a large city.If the city government passes a law that establishes $350 per month as the legal maximum rent,producer surplus decreases by
A) d.
B) b + f.
C) c + g.
D) i.

Question

-The above figure shows supply and demand curves for apartment units in a large city.If the city government passes a law that establishes $350 per month as the legal maximum rent,producer surplus decreases by
A) d. 
B) b + f. 
C) c + g. 
D) i.

Quizplus · Accepted Answer

Producer surplus decreases by the area c + g when a price ceiling (maximum legal rent) is set below the equilibrium price, as it reduces the area between the supply curve and the price level from what it would have been at equilibrium, thus decreasing the earnings of producers.

-The Above Figure Shows Supply and Demand Curves for Apartment