Figure 7-19
-Refer to Figure 7-19.If the government imposes a price floor of $55 in this market,then total surplus will be
A)$100.00 higher than it would be without the price floor.
B)$50.00 lower than it would be without the price floor.
C)$125.00 lower than it would be without the price floor.
D)$62.50 lower than it would be without the price floor.

Question

Figure 7-19 
-Refer to Figure 7-19.If the government imposes a price floor of $55 in this market,then total surplus will be
A)$100.00 higher than it would be without the price floor. 
B)$50.00 lower than it would be without the price floor. 
C)$125.00 lower than it would be without the price floor. 
D)$62.50 lower than it would be without the price floor.

Quizplus · Accepted Answer

A price floor set above the equilibrium price leads to a surplus, reducing total surplus due to inefficient allocation of resources. The loss in total surplus is typically represented by the deadweight loss, which in this case is $62.50.

Figure 7-19 -Refer to Figure 7-19.If the Government Imposes a Price Floor