With a price floor
A) Producer surplus will fall if profits fall
B) Producer surplus will fall if profits rise
C) Producer surplus will increases if profits fall
D) Producer surplus always increases

Question

Quizplus · Accepted Answer

A price floor is a government-mandated minimum price that must be charged for a good or service. If the minimum price is above the equilibrium price, there will be a surplus of supply and a shortage of demand. This means that some producers may not be able to sell all of their goods at the artificially high price. Therefore, their profits may fall, leading to a decrease in producer surplus.

With a Price Floor