In case of price ceiling, consumer surplus rises
For unlimited access to Homework Help, a Homework+ subscription is required.
In case of price floor, consumer surplus rises.
Use the diagram to answer the following questions from (a-c).
Ā
a)At the initial equilibrium price, which area represents consumer surplus? Which area represents the producer surplus?
b)After the price ceiling is imposed, which area represents consumer surplus? Which area represents the producer surplus?
c)Which area represents the deadweight loss cost of the price ceiling?