When a price ceiling is imposed on a competitive market at a level above the equilibrium price:
A)the consumer surplus is reduced.
B)producers lose some or all of the producer surplus.
C)the total surplus is not changed by the price ceiling.
D)both the producers and consumers lose surplus.

Question

Quizplus · Accepted Answer

A price ceiling set above the equilibrium price is non-binding, meaning it does not affect the market. Therefore, the total surplus remains unchanged.

When a Price Ceiling Is Imposed on a Competitive Market