Other things equal, a price floor will reduce consumer surplus, but it will increase producer surplus if the government buys up any surplus at the price floor.

Question

Other things equal, a price floor will reduce consumer surplus, but it will increase producer surplus if the government buys up any surplus at the price floor.
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Quizplus · Accepted Answer

A price floor sets a minimum price above the equilibrium price. This reduces the quantity demanded and increases the quantity supplied, resulting in a surplus. If the government buys up any surplus at the price floor, it will increase producer surplus by providing a market for the surplus goods. However, consumers will still face higher prices and reduced quantity, resulting in a decrease in consumer surplus.

Other Things Equal, a Price Floor Will Reduce Consumer Surplus