Figure 5.5 Figure 5.5 shows the market for apartments in Springfield.Recently, the government imposed a rent ceiling of $1000 per month.
-Refer to Figure 5.5.Suppose that instead of a rent ceiling, the government imposed a price floor of $2000 per month for apartments.What is the value of producer surplus after the imposition of the price floor?

Question

Figure 5.5  Figure 5.5 shows the market for apartments in Springfield.Recently, the government imposed a rent ceiling of $1000 per month.
-Refer to Figure 5.5.Suppose that instead of a rent ceiling, the government imposed a price floor of $2000 per month for apartments.What is the value of producer surplus after the imposition of the price floor?

Quizplus · Accepted Answer

With a price floor of $2000 per month, 500 apartments will be supplied and 160 apartments will be demanded, resulting in a surplus of 340 apartments. The producer surplus can be calculated as the area of the triangle below the price floor and above the supply curve: 
(1/2) x ($2000-$400) x 500 = $450,000
However, since only 160 apartments will be rented out, the actual producer surplus is the rectangle below the price floor and above the equilibrium quantity: 
($2000-$400) x 160 = $240,000. Therefore, B is the correct answer.

Figure 55 Figure 5