Figure 7-25
-Refer to Figure 7-25.Suppose the government imposes a price floor of $28 in this market.If the sellers with the lowest cost are the ones who sell the good and the government does not purchase any excess units produced,then total surplus will be
A)$400.
B)$800.
C)$1,120.
D)$1,184.

Question

Figure 7-25 
-Refer to Figure 7-25.Suppose the government imposes a price floor of $28 in this market.If the sellers with the lowest cost are the ones who sell the good and the government does not purchase any excess units produced,then total surplus will be
A)$400. 
B)$800. 
C)$1,120. 
D)$1,184.

Quizplus · Accepted Answer

A price floor of $28 will lead to a surplus where only the sellers with the lowest cost will sell. The total surplus is the sum of consumer and producer surplus at the quantity sold, which is $1,120.

Figure 7-25 -Refer to Figure 7-25.Suppose the Government Imposes a Price Floor