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

question 78

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.

---

Definitions:

Reality

The state of things as they actually exist, as opposed to an idealistic or notional idea of them.

Process

A series of actions or steps taken in order to achieve a particular end.

Favorable Variance

The difference between actual results and expected (budgeted) results that indicates more efficient or cost-effective performance.

Actual Cost

The actual expenses incurred in acquiring an asset or delivering a service, including all relevant expenditures without estimation.