Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:(Problem 10e.) The Venezuelan government has imposed a price ceiling on the retail price of roasted coffee beans. The
accompanying diagram shows the market for coffee beans. In the absence of price controls, the economy is in equilibrium
with an equilibrium price of PE and an equilibrium quantity bought and sold of QE.
Price of
coffee
beans
PE
E
QE
Quantity of coffee beans
When a price ceiling is implemented, the loss in total surplus is shown by
Area C + E
O Area B +E
O Area E
Area B
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