If the Intended Aim of the Price Floor Set in the Graph

question 55

Multiple Choice

If the intended aim of the price floor set in the graph shown was a net increase in the well-being of producers,then positive analysis would have us consider:

• A) whether the surplus transferred from producers to consumers is larger than the consumer surplus lost to deadweight loss.
• B) whether the surplus transferred from consumers to producers is larger than the consumer surplus lost to deadweight loss.
• C) whether the producer surplus lost to deadweight loss is greater than the producer surplus gained from a higher price.
• D) whether the producer surplus lost due to lower prices is greater than the producer surplus lost due to fewer transactions taking place.

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