Questions
Multiple choice
The graph above shows the demand and supply of honey. There are now some areas shaded.The government imposes a price floor of $12.00 per unit of honey.Which of the shaded area(s) of the graph represents Producer Surplus when there is a price floor.
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To determine which shaded areas correspond to Producer Surplus (PS) under a price floor of $12, we first recall the definitions and how they appear on a standard supply-demand diagram. Producer surplus is the area above the supply curve and below the market price for the units actually sold. When a price floor is imposed, the quantity traded is the amount producers are willing to supply at that floor (the quantity supplied at price = floor), and PS consists of the vertical strip(s) between the price floor line and......Login to view full explanationLog in for full answers
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