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Figure: Price Ceilings and Random Allocation
-(Figure: Price Ceilings and Random Allocation) Refer to the figure. When a controlled price is imposed and the quantity of goods is allocated randomly between the highest valued uses and lowest valued uses, total consumer surplus under random allocation is represented by area:
A) A.
B) B.
C) C.
D) D.

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Use the following to answer questions:
Figure: Price Ceilings and Random Allocation 
-(Figure: Price Ceilings and Random Allocation) Refer to the figure. When a controlled price is imposed and the quantity of goods is allocated randomly between the highest valued uses and lowest valued uses, total consumer surplus under random allocation is represented by area:
A) A. 
B) B. 
C) C. 
D) D.

Quizplus · Accepted Answer

Total consumer surplus is represented by the area below the demand curve and above the price. Under random allocation, the price ceiling causes a shortage of the good, so the quantity supplied is less than the quantity demanded. As a result, some consumers are willing to pay more than the controlled price but are unable to get the good. The area B represents the consumer surplus that is lost due to this shortage. Therefore, the best choice is B.

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