Question

The government of Venezuela imposed price ceilings on a wide variety of consumer goods from 2007 to at least 2015 (the time of writing) The markets for flour, sugar, and cooking oil were subject to strong price controls that required they be sold below the market price. As a result of these price ceilings, in 2015 the government required that producers provide between 30 and 100 percent of their output to the government. Use the graph to the right to illustrate the impact of the price ceiling in the market for sugar indicate the areas representing consumer surplus, producer surplus, and deadweight loss Determine any excess supply or shortage What areas represent the consumer surplus ? Select all that apply Supply Price ceiling DOOOOO sees ロロロロロロ Demand IM IN See sc Quantity What areas represent producer Surplus? Select all that apply OD ON DOOC Click to select your answer(s)

Answer 1

Consumer surplus is represented by Area A, B & D

Producer surplus is represented by Area H

Dead weight loss is represented by Area C & E

The shortage is represented by the distance between Q3 & Q1

There is no surplus