In a market with a rent ceiling set below the equilibrium rent, the producer and consumer surplus

A) both increase.
B) both decrease, but generally not to zero.
C) do not change.
D) are eliminated.
E) are both totally converted into deadweight loss.

B

Economics

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The government heavily subsidizes the production of ethanol to encourage the purchase of ethanol over oil, a less environmentally friendly form of energy. Given that the supply elasticity of ethanol, ?, is estimated to be about 0

13, what would the elasticity of demand, ?, have to be for consumers to receive at least half of the subsidy, and therefore encourage ethanol consumption? A) ? must be less than . B) ? must be greater than . C) ? must be more inelastic than the elasticity of supply. D) Both A and C.

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Li works for a wage of $9 per hour. He has 50 hours to devote to work or leisure. If his wage rises to $11 per hour, _____

a. he will spend more time working because his opportunity cost of leisure will rise b. he will spend less time working because his opportunity cost of leisure will rise c. he will spend less time working because his opportunity cost of leisure will fall d. he will spend more time working because his opportunity cost of labor will rise

Economics