Question

Supply P* Gi Demand Qd Qs Quantity

Refer to the table above. If the market is originally in equilibrium and a price ceiling of $50 is imposed, which of the following is incorrect?

A. Net surplus in the economy will decrease

B. Producer surplus will decrease

C. Supply will decrease

D. Consumers will purchase less than they would at the equilibrium price

E. Producers will sell less than they would at the equilibrium price

Answer 1

(A) net in the will decried [correct] because at equilibrium total surplus if maximum any denote form equilibrium each to decrees in surplus B) produce surplus will decrees [correct] in producer surplus was equal to area of Delta A E B after price celling producer surplus is equal to area of Delta P C B c) supply will decrease [correct] D) consider will purchase less then they would at the equilibrium price [in correct] Because at price celling customer will purchase 300 units of good which is high, then the purchase at equilibrium price (i.e 150 units) so, the correct option is (D)