Figure 7-27
-Refer to Figure 7-27.If the government mandated a price increase from P1 to a higher price,then
A)total surplus would decrease.
B)consumer surplus would increase.
C)total surplus would increase,since producer surplus would increase.
D)total surplus would remain unchanged.

Question

Figure 7-27 
-Refer to Figure 7-27.If the government mandated a price increase from P1 to a higher price,then
A)total surplus would decrease. 
B)consumer surplus would increase. 
C)total surplus would increase,since producer surplus would increase. 
D)total surplus would remain unchanged.

Quizplus · Accepted Answer

When the government mandates a higher price, the quantity demanded decreases while the quantity supplied increases. This results in a decrease in consumer surplus and an increase in producer surplus, causing a decrease in total surplus. Therefore, option A is the correct choice.

Figure 7-27 -Refer to Figure 7-27.If the Government Mandated a Price Increase