All else equal,if a price floor above the equilibrium is imposed on a market and the government buys the surplus,consumer surplus will _____ and producer surplus will _____.
A)fall;rise
B)fall;fall
C)rise;fall
D)rise;rise

Question

Quizplus · Accepted Answer

A price floor set above the equilibrium price will lead to a surplus of goods. The government buying this surplus will not change the fact that consumers are paying higher prices than they would in an equilibrium situation, thus reducing consumer surplus. However, producers benefit from the higher price and guaranteed sales to the government, increasing producer surplus.

All Else Equal,if a Price Floor Above the Equilibrium Is