Figure 4-5 Figure 4-5 Shows the Market for Apartments

question 102

Multiple Choice

Figure 4-5 Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at R0.
-Refer to Figure 4-5.Suppose that instead of a price ceiling,the government imposed a price floor of R1.What is the area representing producer surplus after the imposition of the price floor?

• A)A
• B)B + D + F
• C)C + E
• D)B + C + D + E + F

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Definitions:

Persistent Shortages

An economic condition where the demand for a good or service consistently exceeds its supply, often due to factors like price controls, causing prolonged scarcity.

Normal Goods

Goods for which demand increases as the income of consumers increases.

Incomes

refer to the earnings received by individuals or households, including wages, salaries, benefits, and returns from investments.

Equilibrium Price

The cost level at which the supply of products equals the demand for those products in the market.