If the Intended Aim of the Price Ceiling Set at $6

question 1

Multiple Choice

If the intended aim of the price ceiling set at $6, as shown in the graph, was a net increase in the well-being of consumers, then positive analysis would conclude that the policy was:

• A) effective because the surplus gained by consumers through lower prices is greater than the surplus they lost due to fewer transactions taking place.
• B) ineffective because the surplus gained by consumers through lower prices is less than the surplus they lost due to fewer transactions taking place.
• C) effective because the surplus lost by producers through lower prices is less than the surplus gained by consumers through lower prices.
• D) ineffective because the amount of deadweight loss is greater than the surplus gained by consumers from lower prices.

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