If the Intended Aim of the Price Floor Set at $12

question 133

Multiple Choice

If the intended aim of the price floor set at $12, as shown in the graph, was a net increase in the well-being of producers, then normative analysis would conclude that the policy was:

• A) effective because the surplus gained by producers through higher prices is greater than the surplus they lost through deadweight loss.
• B) ineffective because the surplus gained by producers through higher prices is greater than the surplus they lost through deadweight loss.
• C) effective because the surplus gained by producers through higher prices is greater than the surplus lost by consumers through higher prices.
• D) There is no "right" conclusion to be reached in a normative sense, because normative analysis is not based on value judgements.

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