-In the above figure, suppose that the government sets a limit to production at 10 units of output and the price rises to $4. In comparison to a competitive market the consumer surplus would fall by
A) $0.
B) $10.
C) $15.
D) $20.

Question

-In the above figure, suppose that the government sets a limit to production at 10 units of output and the price rises to $4. In comparison to a competitive market the consumer surplus would fall by
A) $0. 
B) $10. 
C) $15. 
D) $20.

Quizplus · Accepted Answer

The consumer surplus falls by $15 because the price increase from the competitive market price to $4 reduces the area of consumer surplus by the difference in price times the quantity, which is $1.5 (the difference between the competitive price and $4) times 10 units.

-In the Above Figure, Suppose That the Government Sets a Limit