The above figure shows the market for winter jackets. In an effort to keep the nation warm, the president places a price ceiling of $100 in the market for winter jackets
When the price ceiling is in place and taking account of the resources lost in search, consumer surplus ________ and producer surplus ________ compared to the equilibrium before the price ceiling was imposed. A) decreases; increases
B) decreases; decreases
C) increases; increases
D) increases; decreases
E) does not change; increases
B
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Marginal revenue product is the
a. additional revenue from one additional dollar increase in price. b. change in the revenue product resulting from one additional unit of input. c. additional revenue from one additional unit of input. d. change in revenue resulting in one additional dollar in price.
Which of the following offers an explanation as to why the principal-agent problem exists for a firm?
a. The firm cares less about profit and more about cost when there are many competitors in the market. b. The firm offers an employee-incentive program in which employees share in the firm's profits. c. The firm operates in a market with many competitors forcing the firm to pay its employees more to keep them from switching to another firm. d. The firm operates to maximize profit while the employees attempt to work as little as possible to earn their paychecks.