The following figure shows the effect of a price ceiling in the market for yams.The market was initially in equilibrium at price P₂and quantity B.
Figure 10-1
-Refer to Figure 10-1.The change in aggregate producer surplus due to a price ceiling set at P₁ is area _____.

Question

The following figure shows the effect of a price ceiling in the market for yams.The market was initially in equilibrium at price P₂and quantity B.
Figure 10-1

The following figure shows the effect of a price ceiling in the market for yams.The market was initially in equilibrium at price P<sub>2 </sub>and quantity B. Figure 10-1 -Refer to Figure 10-1.The change in aggregate producer surplus due to a price ceiling set at P<sub>1</sub> is area _____. A) -EFI B) EFJ - P<sub>2</sub>JIP<sub>1</sub> C) -P<sub>2</sub>FIP<sub>1</sub> D) P<sub>1</sub>IM

-Refer to Figure 10-1.The change in aggregate producer surplus due to a price ceiling set at P₁ is area _____.

Quizplus · Accepted Answer

The area of aggregate producer surplus before the price ceiling is PS1U1B12S1U1B0F. After the price ceiling is set at PS1U1B11S1U1B0, the new equilibrium price is PS1U1B11. The new aggregate producer surplus is PS1U1B11S1U1B0I. The change in aggregate producer surplus is the difference between the two, which is -PS1U1B12S1U1B0F + PS1U1B11S1U1B0I = -PS1U1B12S1U1B0FIPS1U1B11S1U1B0. Thus, the correct answer is C.

The Following Figure Shows the Effect of a Price Ceiling