Which of the Following Is NOT True About Price Floors

question 150

Multiple Choice

Which of the following is NOT true about price floors?

• A) Consumer surplus is always lower than it would be in the competitive equilibrium.
• B) Producer surplus could be lower, higher, or the same as it would be in competitive equilibrium.
• C) Producer surplus could be negative as the result of a price floor.
• D) Producers will often respond to a price floor by cutting production to the point at which price equals marginal cost.
• E) The total producer surplus depends on how producers respond to the price floor in determining their output level.

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