Figure 7-26
-Refer to Figure 7-26.If the government imposes a price floor of $90 in this market,then consumer surplus will be
A)$225.
B)$450.
C)$975.
D)$1,350

Question

Figure 7-26 
-Refer to Figure 7-26.If the government imposes a price floor of $90 in this market,then consumer surplus will be
A)$225. 
B)$450. 
C)$975. 
D)$1,350

Quizplus · Accepted Answer

A price floor of $90 means the price cannot go below $90. Consumer surplus is the area below the demand curve and above the price level, up to the quantity sold. If the price floor is binding, it will reduce the quantity sold, thus reducing consumer surplus. The exact calculation would depend on the demand curve specifics, but based on the options, $225 is the likely reduced consumer surplus.

Figure 7-26 -Refer to Figure 7-26.If the Government Imposes a Price Floor