The number of "Gore in 2004" buttons demanded on a certain university campus is given by D(p)= 100 - p, where p is the price of buttons measured in pennies.The supply function is S(p)= p.The current administration manages to enforce a price ceiling of 40A2 per button.The effect on net consumer's surplus is
A)an increase of $5.50.
B)an increase of $3.50.
C)no change.
D)a decrease of $3.50.
E)a decrease of $5.50.

Question

Quizplus · Accepted Answer

The imposition of a price ceiling below the equilibrium price increases consumer surplus because it allows consumers to purchase the product at a lower price than they would have otherwise. The difference between what consumers are willing to pay and what they actually pay increases, leading to an increase in consumer surplus.

The Number of "Gore in 2004" Buttons Demanded on a Certain