FIGURE 5-7 -Refer to Figure 5-7.The market for good X is in equilibrium at P₀and Q₀.Now suppose the government imposes a ________ at P₂.One result would be ________. A)price floor; an increase in economic surplus represented by area 1 B)price floor; a deadweight loss represented by areas 5 and 6 C)price ceiling; an increase in economic surplus represented by areas 2 and 5 D)price floor; a deadweight loss represented by area 8 E)price ceiling; a deadweight loss represented by areas 5 and 6

Question

Quizplus · Accepted Answer

A price floor set above the equilibrium price (P0) leads to a surplus and a deadweight loss, represented by areas 5 and 6, as it prevents the market from reaching equilibrium.

FIGURE 5-7 -Refer to Figure 5-7.The Market for Good X Is in Is