Under a binding price ceiling, what does the change in producer surplus represent?
A) The gain in surplus for those sellers who are still willing to supply the product at the lower price.
B) The loss in surplus associated with those units that used to be produced at the higher price but are no longer produced at the lower price.
C) The gain in surplus associated with the excess demand created by the price ceiling policy.
D) Both A and B are correct.
E) Both A and C are correct.
B
You might also like to view...
When we measure the impact of exchange rate changes on a nation's trade balance, the bilateral exchange rates explain only part of the change. To assess the overall change, we need to calculate:
a. the home multilateral exchange rate, or real effective exchange rate. b. a nation's income versus income changes in the rest of the world. c. a nation's marginal propensity to consume imports. d. the movement over time of the trade balance along with long-run expectations of the exchange rate.
In the AD-AS framework, long-run equilibrium implies that ________
A) quantity demanded equals quantity supplied at a moderate level of equilibrium inflation B) quantity demanded equals quantity supplied at a point consistent with the short-run equilibrium level of inflation C) quantity demanded equals quantity supplied at a point consistent with the natural rate of unemployment D) all of the above E) none of the above