Figure 4-5 Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at R0.
-Refer to Figure 4-5.Suppose that instead of a price ceiling,the government imposed a price floor of R1.What is the area representing producer surplus after the imposition of the price floor?

Question

Figure 4-5  Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at R0.
-Refer to Figure 4-5.Suppose that instead of a price ceiling,the government imposed a price floor of R1.What is the area representing producer surplus after the imposition of the price floor?

Quizplus · Accepted Answer

The area representing producer surplus after the imposition of the price floor is B + D + F. This is because the price floor raises the price above the equilibrium price, which increases the quantity supplied and the producer surplus.

Figure 4-5 Figure 4-5 Shows the Market for Apartments