The Following Figure Shows the Effect of a Price Ceiling

question 71

Multiple Choice

The following figure shows the effect of a price ceiling in the market for yams.The market was initially in equilibrium at price P₂ and quantity B.
Figure 10-1
-Refer to Figure 10-1.The change in aggregate consumer surplus due to a price ceiling set at P₁ is area _____.

• A)-EFJ
• B)EFJ + P₂JIP₁
• C)EFJ - P₃EJP₂
• D)P₂JIP₁ - EFJ

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Definitions:

Partnerships

A business structure where two or more individuals share ownership, profits, and liabilities of the business.

Interest Rate

The cost of borrowing money or the return on invested funds, typically expressed as a percentage of the principal amount per annum.

Inclined To Invest

Having a predisposition or a favorable attitude towards making investments, often with the expectation of achieving a financial return.

Business Firm

A company that produces goods and services for sale to individual consumers, other firms, or the government.