If an effective price floor has been imposed on a competitive market for peaches, what will...
If an effective price floor has been imposed on a competitive market for peaches, what will happen to consumer surplus, producer surplus and deadweight loss?
Question 6 options:
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Consumer surplus rises, producer surplus falls, deadweight loss rises |
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Consumer surplus falls, producer surplus falls, deadweight loss will not change |
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Consumer surplus falls, producer surplus rises, deadweight loss rises |
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Consumer surplus falls, producer surplus rises, deadweight loss falls |
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Consumer surplus falls, producer surplus falls, deadweight loss falls |
Homework Answers
A price floor is always set above the equilibrium price in the market and that will lead to a decrease in the consumer surplus as the price is higher than before and it will also increase the producer surplus as the firms in the market will not be able to sell at a higher price, Dead weight loss will increase.
The answer is "C".
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If an effective price floor has been imposed on a competitive
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