-Refer to Figure 5-5. What is the value of producer surplus after the imposition of the ceiling?

Question

Quizplus · Accepted Answer

The ceiling price is $100, and the equilibrium price without the ceiling is $150. The producer surplus is the area above the supply curve and below the equilibrium price. With the ceiling price, the producer surplus is the area above the supply curve and below the ceiling price. This area is a triangle with a base of 200,000 units and a height of $50. The area of a triangle is (1/2) * base * height, so the producer surplus is (1/2) * 200,000 * $50 = $5,000,000.