Figure 7-24
-Refer to Figure 7-24.If the government imposes a price floor at $18,then consumer surplus is
A)ABF.
B)AGH.
C)HGCD.
D)HGBF.

Question

Figure 7-24 
-Refer to Figure 7-24.If the government imposes a price floor at $18,then consumer surplus is
A)ABF. 
B)AGH. 
C)HGCD. 
D)HGBF.

Quizplus · Accepted Answer

With a price floor of $18, the new equilibrium price will be at point H where the supply curve intersects the demand curve. At this price, consumer surplus is the triangle AGH. All of the other options either underestimate or overestimate consumer surplus.

Figure 7-24 -Refer to Figure 7-24.If the Government Imposes a Price Floor