When a price ceiling is imposed on a competitive market at a level equal to the equilibrium price:
A)consumer surplus is increased.
B)producer surplus is increased.
C)both producer and consumer surplus is reduced.
D)total surplus remains unchanged.

Question

Quizplus · Accepted Answer

When a price ceiling is set at the equilibrium price, it does not affect the market because the price that sellers are willing to accept and buyers are willing to pay is the same as the ceiling. Therefore, the quantity supplied and demanded remains at the equilibrium level, and total surplus (the sum of consumer and producer surplus) remains unchanged.

When a Price Ceiling Is Imposed on a Competitive Market