Figure SEQ Figure 1
-In Figure 1 which of the following statements is true?
A)When a price intervention, such as a price ceiling or floor, is imposed economic surplus increases
B)When a price intervention, such as a price ceiling or floor, is imposed economic surplus decreases
C)When a price intervention, such as a price ceiling or floor, is imposed economic surplus remains the same
D)When a price intervention, such as a price ceiling or floor, is imposed economic surplus is proportionate to the change in price

Question

Figure SEQ Figure  1 
-In Figure 1 which of the following statements is true?
A)When a price intervention, such as a price ceiling or floor, is imposed economic surplus increases 
B)When a price intervention, such as a price ceiling or floor, is imposed economic surplus decreases 
C)When a price intervention, such as a price ceiling or floor, is imposed economic surplus remains the same 
D)When a price intervention, such as a price ceiling or floor, is imposed economic surplus is proportionate to the change in price

Quizplus · Accepted Answer

In Figure 1, the imposition of a price ceiling or floor results in a deadweight loss, which decreases economic surplus. Therefore, option B is the correct answer.