which statement is correctPrice ceilings and price floors usually reduce the welfare of society because quantity demanded does not equal quantity supplied if the price control is binding.Suppose that at the equilibrium price of $50, the equilibrium quantity is 400 units and consumer surplus is $8,000. If the equilibrium price falls to $40 and the equilibrium quantity increased to 450 units then consumer surplus increases by $4,500.Assume there are only three sellers in a particular market. The cost of production for Alice is $95, for Ben it is $80 and for Carla it is $75. If the price in the market is $100 then producer surplus in the market is $50.The area below a demand curve and above the price measures consumer surplus.An announcement in the news about the positive effects of green tea consumption causes consumers to increase their purchases of green tea. As a result, the equilibrium market price of green tea increases and producer surplus increases.Because price reflects a consumer’s willingness to pay, consumer surplus is the value of a good to a consumer.If the existing market price is more than equilibrium, then total surplus would increase if the price decreased and moved to its market equilibrium.

At the marketplace, market price is the determinants of market situation as a change in market price…

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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which statement is correct

Price ceilings and price floors usually reduce the welfare of society because quantity demanded does not equal quantity supplied if the price control is binding.
Suppose that at the equilibrium price of $50, the equilibrium quantity is 400 units and consumer surplus is $8,000. If the equilibrium price falls to $40 and the equilibrium quantity increased to 450 units then consumer surplus increases by $4,500.
Assume there are only three sellers in a particular market. The cost of production for Alice is $95, for Ben it is $80 and for Carla it is $75. If the price in the market is $100 then producer surplus in the market is $50.
The area below a demand curve and above the price measures consumer surplus.
An announcement in the news about the positive effects of green tea consumption causes consumers to increase their purchases of green tea. As a result, the equilibrium market price of green tea increases and producer surplus increases.
Because price reflects a consumer’s willingness to pay, consumer surplus is the value of a good to a consumer.
If the existing market price is more than equilibrium, then total surplus would increase if the price decreased and moved to its market equilibrium.

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